Print 21 comment(s) - last by mino.. on Oct 5 at 7:39 PM

HP faces criticism for its appointment of Léo Apotheker, former CEO of struggling German software giant SAP AG, to its chief executive post.  (Source: Bloomberg)
Company's stock takes a hit amid uncertainty; new CEO's former firm struggled under his leadership

Say what you will about former Hewlett Packard Company CEO and new Oracle Corporation co-President Mark Hurd's personal indiscretions, but he was a brilliant and dynamic leader at HP.  Following Mr. Hurd's ousting in August, HP has at last named a new CEO -- and it is a relatively surprising pick.

HP has named Léo Apotheker, 57, for the post.  Mr. Apotheker comes to HP after over two decades in management at German software giant SAP AG.  SAP AG appointed Mr. Apotheker to the post of deputy-CEO in 2007, and he would in 2008 be made co-CEO.

Mr. Apotheker comes from a diverse background.  His parents were Polish Jews who fled to the Russo-Chinese border after Germany's invasion of Poland in 1939.  In 1953 they returned to Europe, settling in Aachen, Germany.  Mr. Apotheker is fluent in five languages -- English, French, German, Dutch and Hebrew.

The new CEO is no stranger to American hardware/software giants.  He served at IBM and SDS prior to joining SAP.

Despite that experience, some are dismayed that HP picked Mr. Apotheker.  One European investor called the decision "idiotic", while a veteran U.S. software executive is quoted by Fortune as calling the decision "astonishing".

The criticism boils down to a few factors.  First, SAP sells to businesses primarily, and does not have heavy consumer sales.  HP, on the other hand, does sell to businesses, but relies heavily on consumer sales.  Secondly, SAP has suffered a downturn during Mr. Apotheker's stint at CEO, falling further behind IBM and Oracle (some say that this was not Mr. Apotheker's fault, as the damage was already done).  Last, but not least, the pick of a foreign CEO always has the potential to create a culture clash, even at a company as internationally diversified as HP.

Since the announcement HP stock has dropped from around $42.50 at Wednesday's market close to $40.85 today -- a loss of 3.9 percent market value.  Skepticism is the best way to describe investors' sentiments at the present.

The move relieves interim CEO Cathie Lesjak from the company's top position, letting her refocus on her chief financial officer post.

It also serves as another example in the growing trend of international companies to pick foreign CEOs.  In September Nokia appointed former Microsoft Canada executive Stephen Elop to CEO, replacing Finnish CEO Olli-Pekka Kallasvuo.  Mr. Elop is Nokia's first non-Finnish CEO.  While the HP and Nokia appointments are similar, an important distinction is that Mr. Elop hails from a wildly successful company, while Mr. Apotheker comes from a contracting one.  Hence, HP's move will be greatly scrutinized perhaps more for what kind of company they picked their leadership from, rather than where they picked their leadership from geographically.

HP is the world's biggest technology company with regard to revenue.  Only Microsoft and IBM post greater profits that HP, and only a handful of companies have a higher market cap.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Heh, Apotheker
By Spivonious on 10/1/2010 10:46:29 AM , Rating: 2
Going back to my high school German class...I'm guessing his family used to be pharmacists.

HP is taking a risk by hiring someone whose prior company was less than successful, but maybe he learned from his mistakes.

RE: Heh, Apotheker
By johnsonx on 10/1/2010 11:37:57 AM , Rating: 5
You hardly need a high school german class for that... perhaps it isn't used much, but English still has the word Apothecary.

RE: Heh, Apotheker
By GulWestfale on 10/1/2010 2:19:37 PM , Rating: 4
Yes but how many people in the US speak english?

RE: Heh, Apotheker
By Taft12 on 10/1/2010 3:15:27 PM , Rating: 2
English still has a lot of words only 1% of the population knows. Apothecary is one of them.

RE: Heh, Apotheker
By mrkun on 10/1/2010 8:09:04 PM , Rating: 2
There's an apothecary in Romeo and Juliet and I think that pretty much every English speaker in the world reads that play in high school.

RE: Heh, Apotheker
By ChuckDriver on 10/1/2010 11:38:52 PM , Rating: 2
Or was supposed to read it then procrastinated and fumbled his way through the pop quiz on it.

RE: Heh, Apotheker
By Samus on 10/2/2010 5:28:27 PM , Rating: 2
Apothecary originated in the Holy Bible. Considering he is of Jewish decent, the last name isn't surprising at all.

By MrBlastman on 10/1/2010 10:32:09 AM , Rating: 2
I think Oracle is laughing at HP now.

What were they thinking?

I mean, they don't have a perfect track record--Fiorina sucked, Hurd was good and now... this guy?

.333 Batting average here. Some would say that's good enough to get into the Baseball hall of fame, but, unlike baseball, the teams and records don't reset every season; the game keeps going on.

RE: Err...
By boobot on 10/1/2010 10:57:26 AM , Rating: 3
No, Hurd was not good. He was a short-termer and favored short term gains leading to diminishing long term focus. Repeated aquisitions followed by layoffs and massive Sales build ups led to a quick buck and a temporary increase in stock price. Collapse was certain and he was lucky to be relieved before it happened.

RE: Err...
By gamerk2 on 10/1/2010 1:58:38 PM , Rating: 2
I got news: All coorporations are like that. If you don't keep the investor happy, you get dumped as CEO, remember? And teh investor couldn't care about 10 years down the road.

RE: Err...
By Taft12 on 10/1/2010 3:14:37 PM , Rating: 4
A good CEO can keep investors and employees happy. Hurd managed the former but not the latter - morale in the toilet there according to my contacts.

RE: Err...
By boobot on 10/1/2010 3:26:35 PM , Rating: 2
I completely agree with your first statement. The issue with Hurd was the market eventually didn't agree with his strategies. He initially bumped the shares up but they eventually leveled and slowly declined. HPs major competitors have had their shares steadily increase over the last 5 years. The Street is smart!

RE: Err...
By amanojaku on 10/1/2010 2:37:03 PM , Rating: 2
Wait, is that what Jodie Fisher said?

By bernardl on 10/1/2010 6:29:10 PM , Rating: 2
Since when do we trust market analysts to know how companies should be managed and by whom?

Sony appointed a Brit, Nissan a French, one worked OK the second amazingly well. Wouldn't the conclusion be that the key is the person's true ability more than its nationality?

Macro analysis simply doesn't make any sense in many cases.

In essence, who are we to claim we know better than HP's board who should manage their company...


RE: Amazing...
By TomZ on 10/3/2010 2:15:14 PM , Rating: 2
It does beg the question, however, why not appoint someone who has been obviously successful in their past job? Unlike this guy who may have been successful, may not. There's a lot at stake for HP and the decision seems careless to me.

Wouldn't German Leadership...
By mmatis on 10/1/2010 12:23:05 PM , Rating: 1
be more in line with the Apple worldview? Not that THEY need a new CEO right now, of course. But just sayin'...

RE: Wouldn't German Leadership...
By roykahn on 10/3/2010 10:41:43 PM , Rating: 2
Not really. World domination has been part of the American dream for decades, so Apple is in good hands.

A change might be good.
By fteoath64 on 10/1/2010 11:04:37 AM , Rating: 2
Well having German leadership might be a good change for HP. Even if it is mediocre in performance. All agreed that Hurd was great, but it has been years and HP has gained ground, so there is lee-way for changes of a different kind especially for a company that big and so diversified.

No one can beat Carly in terms of outrageous leadership so it will not be so bad. So "steady as she goes" would be the norm. Let the rest of the company get to work, especially the mobile division who has lots to prove and deliver. If this guy can inject European and Asian talent into the Palm division, they might do wonders to the portfolio.

Wait and see...
By Targon on 10/1/2010 12:24:59 PM , Rating: 2
We can't know how good or bad he is, or how much of an impact he will have on how well or poorly things go for HP. You could have the best leadership, but place them in charge of a failing company, and it may still fail. HP has many big strengths, including good products, so it might be difficult to really hurt that without replacing a lot of good people with incompetent management.

I don’t see this as a good thing.
By Suntan on 10/4/2010 11:12:46 AM , Rating: 2
As a person the likes the webOS interface and wants it on great new phones, and also a person that has to deal with the abomination that is SAP at work every day, I am not a fan of this pick.


SAP struggling ?
By mino on 10/5/2010 7:39:22 PM , Rating: 2
WTF ???

"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki