“We would not be surprised to see HP and SAP get closer,” said Peter Goldmacher, an analyst at Cowen and Company LLC in San Francisco. “The combo makes sense,” he said in a note, adding that the appointment is “a very clear signal that HP is getting serious about enterprise software.”
Apotheker, 57, is taking over as CEO at HP after Mark Hurd resigned on Aug. 6. HP also named Ray Lane, managing partner at Kleiner Perkins Caufield & Buyers and a former Oracle Corp. chief operating officer, as its non-executive chairman. Hurd, who was named a co-president at Oracle on Sept.6, held both the CEO and chairman roles at HP.
HP needs new software businesses to lessen its dependence on low-margin computers and combat rivals including Oracle Corp., Cisco Systems Inc. and International Business Machines Corp., providing clients more complete products and services. SAP is the world’s biggest maker of business-management software.
“IBM, which is their closest systems competitor, has amassed a huge software portfolio that enables people to put a pretty holistic solution together,” said Andrew Butler, vice president of research at Gartner Inc., based in Wokingham, England. “Oracle, with its acquisition of Sun, can do something similar, so HP has never needed its depth of alliances with the SAPs and the Microsofts and others as much as now.”
SAP Shares Rise
Walldorf, Germany-based SAP’s shares rose as much as 2.1 percent, giving it a market value of about 45 billion euros ($62 billion), which is about a third less than HP’s $92 billion.
SAP spokesman Christoph Liedtke said Apotheker’s appointment augurs well for a close partnership between the companies, and that it could help the two companies sell more solutions to joint customers. He declined to comment on speculation that the two companies might merge.
HP’s spokesman in Germany, Norbert Gelse, and the company’s spokeswoman for Europe Africa and the Middle East, Anette Nachbar, didn’t immediately return calls seeking comment.
While “the obvious speculation” is the acquisition of SAP, it’s not a near-term possibility, Butler said.
“For anyone to buy SAP, it’s going to be an enormous financial undertaking, it’ll have a huge cultural impact,” he said. “So if it’s going to come, it’s not going to be immediate. SAP isn’t exactly a company in trouble. They are still an extremely successful company.”
In July, SAP posted a 15 percent increase in second-quarter profit as companies boosted spending on technology. SAP, which provides software for the order fulfilment and accounting behind Apple Inc.’s iTunes download system and is used by companies for payroll and customer relations management, is expanding to applications accessed via the Internet and mobile devices. This year, it bought Sybase Inc., a maker of database and mobile-computing software, for $5.8 billion.
“Looking further out, we believe the most likely outcome is for HP to buy SAP, which gets the company Sybase and enterprise data street credentials” Goldmacher said. “However, until the economics of working with SAP outweigh the economics of working with Oracle, which we don’t expect to happen any time soon, we don’t expect a material relationship to unfold.”
Apotheker left SAP in February after less than a year as sole CEO. He presided over SAP’s first annual revenue decline since 2003 as customers delayed software purchases, while Oracle used acquisitions to expand in applications, SAP’s area of expertise.
‘Lot of Sense’
“HP’s acquisition of SAP would make a lot of sense at a time when software and hardware ‘bundling’ is becoming very popular,” Sebastien Thevoux-Chabuel, an analyst at Oddo Securities, wrote in a report. “In addition, HP was obviously in the running for Sybase for its databases and mobility solutions.”
Goldmacher and Frank Niemann, a consultant for Pierre Audoin Consultants in Munich, Germany, both said HP needs to become stronger in software in order to compete with the likes of Oracle and IBM Corp.
“Because Apotheker came from SAP, there will be a much tighter cooperation between HP and SAP,” Niemann said. He doesn’t necessarily think HP will try to buy SAP, although it is likely HP will continue with acquisitions.
“They must, especially in the area of software,” Niemann said, adding that it will be Apotheker’s job to bring the three pillars of software, services and hardware together in a seamless way; maybe a little bit more like IBM.’’
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