HP names former SAP exec as new CEO

Hewlett-Packard's board of directors has again picked a relative unknown to run one of the best-known tech companies in the world.

The board announced today it has chosen Léo Apotheker as president and chief executive officer. Apotheker, 57, is the former CEO of German software giant SAP.

He will take over the job vacated by Mark Hurd on November 1. Hurd was forced to resign from HP in the midst of a sexual-harassment accusation and expense-reporting scandal on August 6. He subsequently was named co-president of Oracle.

Apotheker will also join HP's board of directors. In addition, the company said it has named Ray Lane, a managing partner at Kleiner Perkins Caufield & Byers, as the non-executive chairman of the board.

Apotheker was chief executive at SAP from 2008 to 2010. He had been with the company for 19 years before resigning in February amid turmoil over poor earnings.

HP had said it was considering both internal and external candidates. As with Hurd and Carly Fiorina before, HP has again chosen to go with an outside hire for the third time in a little over a decade.

It was reported in recent weeks that the board was focusing on internal candidates, including Vyomesh Joshi, Ann Livermore, and Todd Bradley, who head up HP's printing, enterprise, and personal computer divisions, respectively. This marks the third time Livermore has been passed over the for the company's top spot.

HP board member Robert Ryan said in a statement released today that they chose Apotheker because he's "a strategic thinker with a passion for technology, wide-reaching global experience, and proven operational discipline."

It's not the first time HP's board has selected an under-the-radar candidate to lead the company. Hurd was brought in from the Midwest-based NCR to instill his operational know-how on a company reeling from the turbulent tenure of Fiorina. Until his abrupt departure, he was considered a refreshing change.

From a consumer business standpoint, naming the former CEO of SAP as HP's new chief executive may be a bit of a head scratcher. But for corporate customers, it would make sense. SAP works closely with HP's enterprise hardware, software, and consulting groups, and shares many of the same Fortune 500 customers. Apotheker is likely to be well-known in those executive circles.

The combination of Apotheker--the former head of Oracle's toughest competitor in the enterprise software business--and Lane--the former Oracle president some say was ruthlessly forced out of the company by CEO Larry Ellison--will also provide plenty of grist for pundits who see Oracle and HP on a competitive collision course for corporate tech dollars. Indeed, that Hurd was quickly snapped up by Oracle to be its co-president makes this one of the oddest and most theatrical games of executive musical chairs ever to hit Silicon Valley.

Apotheker's appointment does raise another intriguing possibility: Would HP now consider buying SAP to give it the corporate business software it needs to compete with Oracle head on? It's not unthinkable. Six years ago, court documents revealed that Microsoft was in early-stage stalks to acquire the German software giant. But the deal, which would easily have been the largest ever in software, never got very far because it was considered too complicated by both companies.

That, of course, was before Oracle embarked on its six-year acquisition spree, including the deal that brought in Sun Microsystems and the server business that made it a direct competitor to HP. In fact, the Microsoft/SAP revelation came during an antitrust trial that Oracle eventually won, clearing the way for its first major acquisition, rival software maker PeopleSoft.

HP is holding a call with analysts, investors, and the press to discuss the appointments tomorrow at 6 a.m. PDT.

Investors will be keen to see what sort of understanding Apotheker has of HP's consumer business, particularly in PCs and printers. HP is the world's largest seller of both devices, with 18 percent of the PC market, and 41 percent of the printer market, according to IDC.

Some of the initial reactions to the deal have been surprise, confusion, and, ultimately, concern.

Renny Ponvert, head of Management CV, a market research group that keeps tabs on chief executives, in a Bloomberg TV interview today called Apotheker's selection "reactive." His skillset, mainly in the area of enterprise software, "does not look like a good fit to us," he said.

It could be telling if HP announces tomorrow it will give either Bradley, who heads the Personal Systems Group, or Joshi, who heads the printing business, stronger roles. Bradley's business contributes 32 percent of HP's revenue, and he and the company are heavily focused on the developmentand implementation of the WebOS software it acquired in this year's Palm acquisition.

HP's stock was down 3.3 percent to $40.67 in after-hours trading.

Jim Kerstetter contributed to this story.