By John Letzing
SAN FRANCISCO--Leo Apotheker knows something about tumultuous
relationships with corporate boards, which may serve him well at
his new job in the top slot at Hewlett-Packard.
Late last year, a private letter from then-SAP (SAP) AG Chief
Executive Apotheker to the chief executive of rival Oracle Corp.
was leaked to the press. The letter noted Oracle's difficulties in
clearing its purchase of Sun Microsystems with European antitrust
regulators, while renewing an invitation to resolve unrelated,
"open issues" between the companies.
Many saw the letter as a bid to settle an ongoing lawsuit filed
by Oracle (ORCL) against SAP years earlier alleging corporate
theft, in exchange for assistance clearing the Sun deal. SAP
strongly denied those suggestions, though the episode proved
thoroughly embarrassing.
Roughly three months later, SAP surprised investors and analysts
by announcing the departure of Apotheker, a more than 20-year
veteran of the company, after its board declined to renew his
contract.
"It was a total mess," said Cowen & Co. analyst Peter
Goldmacher.
Now Apotheker is in a prime position to take on Oracle once
again, as the newly-appointed chief executive at Hewlett-Packard
Co. (HPQ) H-P announced Apotheker's hiring after the market's close
on Thursday.
The appointment of a career man from a German software firm to
run a Silicon Valley icon has raised some eyebrows. But Apotheker's
makeup may be a solid match for a company in need of bolstering its
presence in the market for complex technology needed by businesses
to process data, experts say.
Apotheker's ugly departure from SAP was likely the result of
differences with company co-founder and Supervisory Board Chairman
Hasso Plattner, said Goldmacher. That, the analyst said, resulted
from contrasting visions over how best to right the wavering
software giant.
Apotheker had been appointed sole chief executive of the company
only about seven months before he stepped aside.
"You've got a guy who was basically given the steering wheel
when the car was already in the air, heading into a ditch,"
Goldmacher said. "The strategy and direction of the company were
still very much run by Hasso."
SAP was in the midst of trying to alter its strategy, with a new
focus on small and medium-sized firms. The Walldorf, Germany-based
company was struggling to release its "Business ByDesign" software,
designed to be hosted and delivered via the Internet; and while
Oracle was gaining ground through a series of large acquisitions,
SAP was drawing some criticism for mostly relying on internal
growth.
An SAP spokesman declined to comment on Apotheker's relationship
with Plattner. But the spokesman did provide a statement from
current SAP co-Chief Executive Bill McDermott: "I personally
congratulate Leo on this tremendous appointment," McDermott said,
"H-P is a great SAP customer, and this move only sets the stage for
an even deeper relationship."
Though Apotheker did not take the helm as sole chief executive
at SAP until 2008, he'd long been seen as a potential top
executive.
He had reportedly been a finalist for the top job at software
maker CA Inc. (CA), for example, before International Business
Machines Corp.'s (IBM) John Swainson was named to the position in
2004.
Targeting Oracle
For H-P, Apotheker's appointment as chief executive means the
company now has a "hard-driving" executive at its helm, who is
well-equipped to drive H-P's business in competition with
traditional SAP rival Oracle, Goldmacher said.
Oracle has become more of a threat to H-P of late, as it has
expanded beyond database and applications software, and moved into
developing both the software and hardware needed to run large
businesses.
"This is critical, because Oracle continues to make H-P less and
less relevant," Goldmacher said of Apotheker's appointment.
One way that Apotheker may make his mark at H-P would be by
pursuing a more aggressive and fine-tuned acquisition strategy,
experts say.
"H-P needs to make acquisitions in software to take it to the
next level," said Altimeter Group LLC analyst Ray Wang. "Despite
Leo's acerbic style and approach, he may be the right person to
kick H-P up a notch and gain the software and services footing it
sorely needs."
One immediate possible acquisition target for H-P, according to
Wang: on-demand customer-relationship management software provider
Salesforce.com Inc. (CRM).
Past feud
Apotheker comes from a sales background at SAP, which he first
joined in 1988. In addition to chief executive, he had served as
co-chief executive, head of North American operations, and chief
executive of SAP France.
His leaked letter to Oracle Chief Executive Larry Ellison came
at a point late last year when Oracle's purchase of Sun was being
held up by the European Commission, due to concerns about the
future of Sun's MySQL database software.
Oracle's ultimately successful purchase of Sun put it on track
to better compete with giants including IBM and H-P.
It also came after years of competition and feuding between SAP
and Oracle.
In 2007, Oracle filed a high-profile lawsuit against SAP,
alleging massive theft by SAP unit TomorrowNow of Oracle's customer
support materials.
Last month, SAP accepted liability in the TomorrowNow case,
though it also said it will "continue to present arguments and
evidence demonstrating that Oracle's damages claims in this matter
are vastly overstated."
-John Letzing; 415-439-6400; AskNewswires@dowjones.com