HP Fires Back at Oracle

After two months of waffling, hemming, and hawing, Hewlett-Packard (NYSE: HPQ  ) has finally picked a CEO to replace Mark Hurd. In the process, HP is picking a fight with IBM (NYSE: IBM  ) and Oracle (Nasdaq: ORCL  ) .

The new leader of the free world's largest technology company as measured by revenue is Leo Apotheker, former CEO of German business software giant SAP (NYSE: SAP  ) . It's a curious choice that took pretty much everybody by surprise, and Apotheker is apt to take the company in a whole new direction. Not necessarily a good one, mind you, but it will at least be different.

All Apotheker knows is enterprise-scaled software, which HP traditionally does very little of. He'll need to get up to speed on the server hardware, printer, and services businesses before doing anything of note. Then again, perhaps that's why he is scheduled to take his new job on Nov. 1 rather than right away – give the poor guy a chance to relocate, look around, and get acquainted with the new digs. But if and when Leo does start mixing it up, I strongly suspect that he'll want to move HP further into the software business; it's what he knows.

Whether that means a renewed commitment to internal innovation or taking the ongoing multibillion-dollar spending spree in a new direction remains to be seen. Whatever HP does tends to play against Big Blue, but a software strategy in particular would acknowledge Oracle as another head-to-head archrival.

Choosing Apotheker almost feels like a jilted partner lashing out after a departing ex. If you can't tame Hurd or get him back, why not go after his new employer with all guns blazing? The new CEO comes with a no-nonsense reputation that will keep Hurd's cost-cutting tradition going. But that's hardly the medicine HP needs right now; company coffers are bulging but morale is low. Passing over a plethora of highly qualified insiders and then not landing on a proven winner could be the final insult that drives another rash of top talent out of HP.

I still think HP should have boldly merged with EMC (NYSE: EMC  ) , thereby staying comfortably in its hardware wheelhouse with rich access to great leaders and a firm hand in the red-hot virtualization game by way of its Vmware (NYSE: VMW  ) semi-subsidiary. Maybe that'll happen when HP's board runs out of patience with Apotheker. I don't see great things happening here.

Does this choice make any sense at all, dear reader? If you feel that way, please explain how in the comments below because I am left scratching my head.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. VMware is a Motley Fool Rule Breakers pick. The Fool owns shares of IBM and Oracle. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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Comments from our Foolish Readers

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  • Report this Comment On October 01, 2010, at 9:02 PM, SimchaStein wrote:

    Let's step from all the personality stuff. Regardless of the person, an outsider has to learn the culture and deal with all the new acquisitions. Let's just look at one, PALM. What is HP doing? They were absent from GigaOm's Mobilize event yesterday.

    The track record for acquisitions for all industries and especially high tech is not great.

    I see a lot of risk for HP with an outsider taking on so much.

  • Report this Comment On October 01, 2010, at 10:35 PM, Michelx wrote:

    Having worked at HP for over 10 years and and experiencing work environments under both Carly Firirina and Mark Hurd, I can say that Mark Hurd is overrated and Wall Street gives the guy too much credit. The only thing he brought to HP is cost-cutting and layoffs. He had no vision and or plans for the future. Most HP employees hated him!

    I hope Leo brings new vision and fresh perspective to HP. I think HP board made the righ choice, it's time to hit back at Larry Ellison and IBM and hit hard!

  • Report this Comment On October 02, 2010, at 10:51 AM, zoningfool wrote:

    Hit back at Oracle, Ellison and Hurd with Apotheker!!? All that decision is going to do is poke the lion in the eye. Never a good choice. Especially not with Oracle. Especially not with Ellison.

    There are reasons the stock sank after the Apotheker choice was announced.

    First off--Apotheker is in over-his-head running a company this size since he's coming from a company with only $15B in annual revenues at SAP to a company with approximately $115B on the top-line.

    Secondly, Apotheker did not exactly depart SAP as a conquering hero. He was essentially forced out when the board didn't renew his contract. This is how it was reported the event at the time:

    "Feb. 8 (Bloomberg) -- SAP AG Chief Executive Officer Leo Apotheker unexpectedly resigned, amid customer and employee discontent, and a failure to boost revenue at the world’s largest business-management software maker.

    SAP’s supervisory board decided not to extend Apotheker’s contract, which would have expired at the end of the year. "

    http://www.businessweek.com/news/2010-02-08/sap-ceo-apotheke...

    So, while Oracle got 'The Hurd Premium' , HP and its investors can look forward to 'The Apotheker Discount'

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