UPDATE 1-HP defends Apotheker, blasts ex-CEO Hurd

Mon Oct 11, 2010 8:38pm EDT

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* Says no evidence of involvement in SAP misconduct

* Says Hurd lied repeatedly to HP board

(Adds details on letter, background, byline)

By Gabriel Madway

SAN FRANCISCO, Oct 11 (Reuters) - Hewlett-Packard Co (HPQ.N) on Monday defended new CEO Leo Apotheker from the latest barrage of criticism, and accused his predecessor Mark Hurd for the first time of repeatedly lying to the board.

HP's newly aggressive stance could further inflame the company's already testy relationship with partner and rival Oracle Corp ORCL.O, which hired Hurd as co-president in September after he left HP.

HP was responding to widely read New York Times columnist Joe Nocera, who suggested that former SAP AG (SAPG.DE) boss Apotheker had known about the theft of software that took place at a SAP subsidiary called TomorrowNow, but had initially done nothing about it.

Oracle has accused SAP -- through TomorrowNow -- of gaining unauthorized access to its customer support website, allowing SAP to copy thousands of Oracle software products and other confidential material. SAP has accepted liability for copyright infringement in the lawsuit, set to go to trial in November.

"The facts are: TomorrowNow was never under Mr. Apotheker's supervision," incoming HP Chairman Ray Lane said in a letter to the Times.

"Oracle has been litigating this case for years and has never offered any evidence that Mr. Apotheker was involved."

Nocera also suggested Hurd was brought down by "minor expense account shenanigans." In the announcement of Hurd's resignation in August, HP had said the executive had filed inaccurate expense reports to conceal a "close personal relationship" with a female contractor.

"As for the reasons why Mr. Hurd left HP: no board can retain a CEO who violates the trust and integrity needed to lead a public company," Lane said.

"The bottom line is: Mr Hurd violated the trust of the board by repeatedly lying to them in the course of an investigation."

An Oracle spokeswoman declined to comment. Hurd, through a representative, also declined to comment.

RIVALRY GROWS HOTTER

HP's hiring of Apotheker and Lane -- a former Oracle executive -- was announced late last month, but they will not officially start until Nov. 1. Their hiring, which clearly irked Oracle CEO Larry Ellison, was interpreted by many analysts as an indication that HP plans to challenge Oracle more seriously in enterprise software.

Ellison has derided HP's board for its choice of Apotheker, who left SAP abruptly after just several months as sole CEO. The German executive was named as SAP's co-chief executive in April 2008, and took over sole responsibility in July 2009. He served on SAP's board from 2002 until 2010.

But Lane said TomorrowNow's conduct took place before Apotheker became CEO.

SAP acquired TomorrowNow in 2005 but shut it down in 2008 after unsuccessfully trying to sell it. Oracle alleged members of the SAP board were warned that TomorrowNow "did not operate legally" early in 2005.

Lane's letter also took on a much sharper tone towards Hurd, a highly regarded executive who was ousted by HP in a surprise move in early August.

Sources close to Hurd have repeatedly challenged the company's version of events and blamed expense report inconsistencies on sloppy record-keeping.

Hurd's departure prompted a number of analysts, shareholders and other business leaders to criticize HP's board.

But Lane defended the move: "The board simply had no alternative." (Reporting by Gabriel Madway; Editing by Richard Chang, Phil Berlowitz)

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