* Oracle rivalry seen growing
* Salary of $1.2 million
* Only Apotheker was offered post; HP had 6 candidates
* Shares down 3.4 pct
(Adds Ellison comments)
By Gabriel Madway
SAN FRANCISCO, Oct 1 Hewlett-Packard Co's
(HPQ.N) new CEO failed to impress Wall Street in his first
conference call with investors, as doubts persisted as to
whether the Silicon Valley outsider has the experience to steer
the sprawling company.
HP shares slid 3.4 percent after former SAP (SAPG.DE) CEO
Leo Apotheker provided few details on his plans to accelerate
sales growth, in a performance one analyst called "lackluster."
Apotheker, 57, spent seven months as CEO of German software
giant SAP before resigning abruptly amid customer complaints
over software support fee increases. [ID:nN30293699]
"It would have been almost impossible for the board to hire
an outside person and have the stock go down, but that's what
they managed to do," Gleacher & Co analyst Brian Marshall said,
calling his hiring controversial.
He added that the downside was tempered by the appointment
of former Oracle Corp ORCL.O President Ray Lane, a well-known
figure in technology circles, as chairman.
Apotheker, an experienced salesman who speaks five
languages, emphasized his international experience and did not
hint at major changes.
He said HP was healthy and executing well, and praised the
management team that includes Todd Bradley and Ann Livermore,
two executives that had been in the running for the CEO post.
Analysts say there is also some concern among investors
that Bradley, who is well-regarded, might jump ship for another
company after being passed over for the top job.
Wedbush Securities analyst Kaushik Roy noted that
Apotheker's subdued demeanor on the conference call presented a
stark contrast with his bold and confident predecessor, Mark
Investors will stay on the sidelines until they get a
clearer sense of the new CEO, he said.
"If he had left SAP on a high note, there wouldn't be so
much uncertainty," Roy said.
Reuters Breakingviews [ID:nN3024931]
Graphic showing HP shares vs IBM, Oracle
TOUGH ACT TO FOLLOW?
Robert Ryan, HP's lead director, said Apotheker was the
only person offered the post. The board ended up with six
candidates it felt could have done the job.
"We cast the net very far and very wide. We had lots of
candidates," Ryan said on the conference call.
Hurd was popular with Wall Street. His aggressive cost cuts
and acquisitions helped revive HP, but Hurd quit in August amid
a scandal involving a female contractor. [ID:nN30172246]
M. Eric Johnson, director of the Center for Digital
Strategies at the Tuck School of Business at Dartmouth, said
the Apotheker selection was "way out of left field."
He said Apotheker is known for his sales prowess and
considerable intellect, but wondered whether he was a good fit
culturally. He said the appointments of Apotheker and Lane
should increase the heat in HP's growing rivalry with Oracle.
While at SAP, Apotheker and Oracle CEO Larry Ellison had been
"It certainly is raising the ante; the question for
investors is whether this is the right battle to pick. HP has a
lot of fish to fry and that's just a small piece," he said.
Ellison, for his part, used the Apotheker hiring to take
another swipe at HP's board. In emailed comments to the Wall
Street Journal, Ellison said: "HP had several good internal
candidates ... but instead they pick a guy who was recently
fired because he did such a bad job of running SAP."
He also said: "The HP board needs to resign en masse."
Ellison has been taking shots at HP's board ever since Hurd
was forced out. Ellison hired Hurd, his close friend, as
president of Oracle after his departure from HP. Relations
between the companies have been strained since then.
HP also released details of Apotheker's compensation. The
total package, which includes salary, bonus, restricted stock
and other benefits, was valued at roughly $85 million over four
years by Gleacher's Marshall. That assumes HP shares hit $53 --
a 30 percent gain from Friday. For more details on the pay
package, click here: [ID:nN01262469]
Hurd took home roughly $98 million in total compensation
from HP over his final three years at the company.
HP's stock slid as much as 4.3 percent before ending 3.1
percent lower at $40.77 on the New York Stock Exchange.
(Additional reporting by Liana Baker; Editing by Edwin Chan,
Derek Caney and Richard Chang))