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 user 2010-10-06 at 7:37:20 am Views: 36
  • #23910

    Apotheker stresses more focus on software and IT services
    SAN FRANCISCO — Shares of Hewlett-Packard Co. slipped 3% Friday morning as Wall Street reacted with a mix of puzzlement and dismay to the naming of Leo Apotheker as the tech giant’s new chief.But some analysts portrayed the decision to hire the former SAP  boss as a potentially smart move, as H-P  seeks to expand its reach in the increasingly competitive and consolidating market for corporate information technology.

    Apotheker offered more clarity on the thinking behind the choice as he affirmed in a call with analysts H-P’s global strength as a hardware company, while noting the need for the tech giant to focus on two key areas: software and high-end corporate IT services. “H-P is grounded in the hardware business,” he said. “There are few companies if any on the planet that could even come close to H-P’s capability when it comes to hardware. I bring to the table an asset that H-P is less grounded in. That’s software and to a certain extent, high-added value services.”Apotheker portrayed software as a key link to making H-P more competitive, saying: “I believe H-P should be more valuable than the sum of its parts. And we believe that software is sort of the glue to make that happen.”“Software is how we can make sure that various parts of our technology actually fit well together,” he continued. “It’s not only software. Also higher-value-added services are increasingly an important component in the strategy as well.”

    His first comments on a webcast as H-P’s new leader didn’t appear to ease investor worries. Shares of the company lost another $1.28 in early trades to $40.80, after falling sharply in after-hours trading on Thursday after the CEO announcement.Wells Fargo analyst Jason Maynard called the choice ”a surprising and very non-consensus move.”“He isn’t familiar to most hardware investors and those that do, might have a mixed view given his departure from SAP,” Maynard added in a note. “During Apotheker’s tenure as CEO, SAP had a very strong run but waned at the end as the company was challenged to bring organically developed products to market in a very difficult IT spending climate.”

    Still, he cited as positive the fact that Apotheker is an “external candidate with a different perspective, and deep enterprise experience.”He also noted that “it seems that H-P is admitting they need some work with their enterprise business.”

    Gartner analyst Martin Reynolds echoed this view, saying in a phone interview that, in the corporate arena, H-P’s businesses are mainly focused on products that “appeal below the CIO,” or the chief information officer.“The challenge for H-P is to get above that,” Reynolds added.H-P is considered a powerhouse player when it comes to business IT equipment, from personal computers and servers, to printers, many of which are viewed as commodities.

    But unlike such players as IBM Corp and Oracle Corp., the company is still not much of a player in the high-margin IT software and services arena.“They need to be appealing to the CIO and above, not the CIO and below.” Reynolds said.That’s where software and IT services are key, he added. “CIOs have a much harder time with software than they do with hardware. Software shapes the way businesses run. This is isn’t just about software. It’s about going to the next level.”