HP chief Léon Apotheker to challenge Oracle Corp

Harking back to his two-decade career at SAP, Apotheker plans to spin off HP's personal-computer business and dive deeper into business software with the $10.3 billion purchase of Autonomy Corp.

The plans announced this week

With the plans announced this week, Apotheker, 57, makes good on pledges to expand in cloud computing and aims to challenge Oracle and IBM in more profitable products aimed at corporations. Business software delivered a 19 percent operating margin last quarter, more than triple the amount for the PC unit due to be jettisoned.

"There's focus on storage, services, security and networking," said Pat Becker Jr., a fund manager at Becker Capital Management, which holds HP shares among $2.2 billion in accordance with management. "Apotheker's lining up the company to succeed there, and PCs just don't fit. The lessons he learned at SAP have kicked in."

HP as well said it's discontinuing products that run webOS software, which it acquired last year in the $1.2 billion purchase of Palm. The operating system, which powers smart phones and tablet computers, fell short of "internal milestones and financial targets," Hewlett-Packard said Thursday.

Apotheker, who hails from Germany and speaks five languages, rose through SAP's sales and marketing operations, becoming sole CEO in 2009. He was ousted from SAP, the top maker of business-management software, in February 2010.

His tenure as CEO was blemished by an attempted price increase while the recession that rankled consumers and by a clash with German unions on plans to cut jobs. He resigned afterwards presiding over the company's first revenue decline since 2003 as clients delayed software purchases.

As he assumed control of Hewlett-Packard, the company faced slowing revenue growth and increasing competition in cloud computing, the delivery of software and storage over the Internet. He vowed to buy more companies with software expertise, improve product quality and boost spending on technology and development.

While Apotheker is following up on his software pledge, he's backtracking on efforts to make the webOS operating system a viable competitor to Apple and Google.

The PC business

In the PC business, competitors' tablets have cut into sales and consumers are changing how they compute, Apotheker added. "We want to sharpen the focus of HP."

Apotheker is exiting webOS products just a month afterwards the company named Palm's former CEO Jon Rubinstein to head of product development and technology for the personal systems group, which includes PCs, tablets and smart phones.

The company's PCs will feature webOS

Apotheker said in March that all of the company's PCs will feature webOS, a shift away from machines that run only Microsoft Corp.'s Windows operating system.

"He's decided he just can't win that war," said Maribel Lopez, founder of Lopez Technology in San Francisco. "If he's not going to be in devices on the PC side, it makes no sense to be in devices on the phone side."