HP’s choice of chief worries investors

Major investors in Hewlett-Packard have reacted nervously to the appointment of Léo Apotheker as chief executive.

Concerns about his mixed operations record and inexperience with computer hardware appeared to outweigh enthusiasm for his strong relationships with top technology customers.

Shares in the biggest tech company by revenue fell nearly 4 per cent on the uncertainty on Friday.

Mr Apotheker, the former head of German business software supplier SAP, gave no timeline for setting out his own vision for HP.

“I want to meet with as many HP people as I can. The same with customers and shareholders,” Mr Apotheker told investors on his maiden HP conference call with analysts. “Just stay tuned.”

HP directors said Mr Apotheker had been their unanimous and only choice among six candidates qualified to succeed Mark Hurd, who was dismissed in early August amid controversy over his expense filings.

“We wanted a strategic thinker with a passion for technology,” said lead independent director Robert Ryan, praising Mr Apotheker’s track record in helping make SAP the largest provider of business software applications.

Mr Ryan and Wall Street analysts pointed to the new chief executive’s background in far-flung geographies, where HP is keen to expand.

Mr Apotheker’s background, together with HP’s appointment on Thursday of former Oracle president Ray Lane as non-executive chairman, convinced investors that the company is bent on increasing its software offerings to compete on more fronts with IBM, Oracle and Cisco.

All four companies are trying to make themselves into comprehensive suppliers of computer servers, data storage and networking gear, as well as services and software.

Mr Apotheker called software the “glue” that distinguishes HP’s hardware, although it now makes up just 3 per cent of the group’s revenue. Analysts said they expected big acquisitions in software, which could accelerate technology merger activity.

Mr Apotheker did not come cheaply. HP disclosed that in addition to a $1.2m base salary, the 20-year SAP veteran and polyglot will receive a $4m signing bonus, a relocation allowance of $4.6m, and 76,000 shares of restricted stock.

Mr Apotheker lasted less than a year as SAP’s sole chief executive. He was ousted in February after annual software revenue fell 28 per cent.

“The new CEO at HP had to be both visionary and operator to facilitate the company’s ongoing construction of a one-stop IT shop for enterprise solutions,” said analyst Mark Moskowitz of JPMorgan.

“We believe Léo Apotheker possesses visionary qualities, given his contributions to SAP’s software applications business over the years.”

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