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Hewlett-Packard's CEO is breaking with predecessor Mark Hurd's legacy, in part by pledging to use acquisitions to expand in the software market
ByAaron Ricadela
(Bloomberg) -- Leo Apotheker stood before 4,000 Hewlett-Packard Co. colleagues Jan. 31, shielded from the afternoon Bangalore sun by a vast white tent.
Speaking with the accent that betrays his German roots, Apotheker vowed that as chief executive officer of Hewlett-Packard he would treat India more as a market than a source of low-cost labor for product development, as it did under his predecessor Mark Hurd.
CEO since Nov. 1, Apotheker is breaking with Hurd's legacy in other ways. He's overhauling HP's $41 billion personal-computer division and says he will use acquisitions to expand in the software market, dominated by rivals such as Oracle Corp. and International Business Machines Corp. Apotheker is reversing Hurd's emphasis on cost-cutting in a bid to improve product quality and spur home-grown technology, and he's touring HP's offices to find ways to get products to market more quickly.
"HP has lost its soul," he said in an interview at Hewlett-Packard's headquarters in Palo Alto, California, offering a glimpse of the vision he will outline in greater detail at an event on March 14 in San Francisco. "The first thing I wanted to do when I joined HP was listen to the people. The rank and file usually know about all the shortcomings."
Apotheker, 57, resigned as CEO of German software maker SAP AG in February 2010 amid falling sales, clashes with unions over job cuts and a price increase that vexed customers. He takes the helm of a company facing slowing revenue growth and accelerating competition in cloud computing, a fast-growing area of technology that delivers software and storage via the Internet.
HP's Cloud 'Gap'
"There seems to be a gap between what kind of services HP offers and what kind of services people actually need," said Jane Snorek, who helps oversee about $75 billion at Nuveen Asset Management, which sold Hewlett-Packard shares after Hurd's Aug. 6 departure. "People in IT today want their service organizations or consultants to tell them, 'What does the cloud mean to me?'"
Hurd resigned after the company said inaccurate expense reports filed by him or on his behalf concealed a personal relationship with a contractor, in violation of HP's standards of business conduct.
The new CEO says he's likely to buy more companies with software expertise, following HP's Feb. 14 acquisition of data-analysis company Vertica for an undisclosed price. He said he's on the lookout for targets that will help HP beef up security and equip customers to analyze large amounts of data.
"I happen to know something about software," said Apotheker, who spent more than 20 years at SAP, the world's largest maker of business-application software.
Possible Software Targets
Informatica Corp., BMC Software Inc., SAS Institute Inc., Symantec Corp. and CommVault Systems Inc. are among potential targets, said Jayson Noland, an analyst at Robert W. Baird in San Francisco, who has an "outperform" rating on HP shares.
Even after the $13.2 billion acquisition of Electronic Data Systems Corp. -- a deal designed to help it expand in computer services -- HP's services revenue rose less than 1 percent to $34.9 billion in the year that ended Oct. 31. IBM's services sales increased 2.6 percent to $56.4 billion in 2010. HP's software sales were $3.59 billion last fiscal year, compared with $22.5 billion for IBM in 2010.
Two companies not on HP's radar, Apotheker says, are SAP and Salesforce.com Inc., which specialize in applications that help businesses handle such tasks as payroll, financial reporting and customer-relationship management. HP has "no interest" in the kinds of business programs those companies sell, he said in the Feb. 28 interview.
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ByAaron Ricadela
(Bloomberg) -- Leo Apotheker stood before 4,000 Hewlett-Packard Co. colleagues Jan. 31, shielded from the afternoon Bangalore sun by a vast white tent.
Speaking with the accent that betrays his German roots, Apotheker vowed that as chief executive officer of Hewlett-Packard he would treat India more as a market than a source of low-cost labor for product development, as it did under his predecessor Mark Hurd.
CEO since Nov. 1, Apotheker is breaking with Hurd's legacy in other ways. He's overhauling HP's $41 billion personal-computer division and says he will use acquisitions to expand in the software market, dominated by rivals such as Oracle Corp. and International Business Machines Corp. Apotheker is reversing Hurd's emphasis on cost-cutting in a bid to improve product quality and spur home-grown technology, and he's touring HP's offices to find ways to get products to market more quickly.
"HP has lost its soul," he said in an interview at Hewlett-Packard's headquarters in Palo Alto, California, offering a glimpse of the vision he will outline in greater detail at an event on March 14 in San Francisco. "The first thing I wanted to do when I joined HP was listen to the people. The rank and file usually know about all the shortcomings."
Apotheker, 57, resigned as CEO of German software maker SAP AG in February 2010 amid falling sales, clashes with unions over job cuts and a price increase that vexed customers. He takes the helm of a company facing slowing revenue growth and accelerating competition in cloud computing, a fast-growing area of technology that delivers software and storage via the Internet.
HP's Cloud 'Gap'
"There seems to be a gap between what kind of services HP offers and what kind of services people actually need," said Jane Snorek, who helps oversee about $75 billion at Nuveen Asset Management, which sold Hewlett-Packard shares after Hurd's Aug. 6 departure. "People in IT today want their service organizations or consultants to tell them, 'What does the cloud mean to me?'"
Hurd resigned after the company said inaccurate expense reports filed by him or on his behalf concealed a personal relationship with a contractor, in violation of HP's standards of business conduct.
The new CEO says he's likely to buy more companies with software expertise, following HP's Feb. 14 acquisition of data-analysis company Vertica for an undisclosed price. He said he's on the lookout for targets that will help HP beef up security and equip customers to analyze large amounts of data.
"I happen to know something about software," said Apotheker, who spent more than 20 years at SAP, the world's largest maker of business-application software.
Possible Software Targets
Informatica Corp., BMC Software Inc., SAS Institute Inc., Symantec Corp. and CommVault Systems Inc. are among potential targets, said Jayson Noland, an analyst at Robert W. Baird in San Francisco, who has an "outperform" rating on HP shares.
Even after the $13.2 billion acquisition of Electronic Data Systems Corp. -- a deal designed to help it expand in computer services -- HP's services revenue rose less than 1 percent to $34.9 billion in the year that ended Oct. 31. IBM's services sales increased 2.6 percent to $56.4 billion in 2010. HP's software sales were $3.59 billion last fiscal year, compared with $22.5 billion for IBM in 2010.
Two companies not on HP's radar, Apotheker says, are SAP and Salesforce.com Inc., which specialize in applications that help businesses handle such tasks as payroll, financial reporting and customer-relationship management. HP has "no interest" in the kinds of business programs those companies sell, he said in the Feb. 28 interview.
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