HP's Appointment of German CEO Draws Criticism
October 1, 2010 10:25 AM
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HP faces criticism for its appointment of Léo Apotheker, former CEO of struggling German software giant SAP AG, to its chief executive post.
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
, 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
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
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
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
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10/1/2010 1:58:38 PM
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.
10/1/2010 3:14:37 PM
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.
10/1/2010 3:26:35 PM
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!
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