Can Leo Apotheker be exactly the medicine Hewlett-Packard (NYSE: HPQ) needed?

There are some early signs of improvement in HP under new CEO Apotheker. At first glance, you might think I'm bonkers: Both sales and earnings growth slowed down in the fourth quarter when compared to full-year numbers. Moreover, guidance for the coming year points to even slower revenue growth yet. Isn't that a lobster walk? Bring back Mark Hurd!

But then you're not seeing the forest for the trees. Apotheker promises to increase R&D spending and reinforce the old innovation culture at HP, which is a complete reversal from Hurd's merciless cost-cutting. Leo has only spent three weeks at his HP desk (or running away from Oracle (Nasdaq: ORCL) and its litigator crew, depending on whom you ask), yet the R&D budget already increased by 10% quarter over quarter. This cuts into profits in the short term, but is the only way to save HP's core business in the long run.

Moreover, it only makes sense if Apotheker takes HP away from the current hardware-and-services model and adds a healthy dose of software to the mix, as he implied in the earnings call. After all, he was groomed in the software powerhouse SAP (NYSE: SAP), and it's the business he knows best. Printer ink is a high-margin business, and HP is better at turning a profit on commodity hardware than Dell (Nasdaq: DELL), but software design done right is the ultimate margin booster. Whether by fresh in-house innovation or by acquisition, or more likely a combination of the two, this is where HP needs to invest most of its growth efforts under Apotheker.

So HP may have a good thing going here. Is Apotheker doing enough to reverse the damage done by Hurd? Discuss in the comments below.

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