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 user 2010-10-06 at 7:39:09 am Views: 41
  • #24346

    Apotheker stresses more focus on software and IT services
    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.

    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

    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.