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HP’s Lane Defends New CEO Apotheker, Faults Hurd in Letter

Oct. 12 (Bloomberg) -- Hewlett-Packard Co. chairman-designate Ray Lane described Leo Apotheker, the company’s newly appointed chief executive officer, as a “principled leader” and faulted former CEO Mark Hurd in a public letter.

Lane said in yesterday’s letter, sent to the New York Times, that Hurd, who ran HP until his exit Aug. 6, demonstrated a lack of integrity that led to his resignation. Hurd stepped down after a probe found he violated HP’s business-ethics code.

Hewlett-Packard shares have declined 2 percent since Apotheker’s appointment Sept. 30, a sign of analysts’ concern he may not be able to generate the growth the company needs to contend with rivals such as Oracle Corp. and Cisco Systems Inc. Jack Welch, former CEO of General Electric Co., has criticized HP for the way it handled Hurd’s departure.

“In hiring Leo Apotheker, HP’s Board turned to a principled leader of outstanding personal and professional integrity,” Lane wrote in the letter, which HP also sent to Bloomberg News. “Mr. Hurd violated the trust of the board by repeatedly lying to them in the course of an investigation into his conduct.”

Lane, a managing partner at venture-capital firm Kleiner Perkins Caufield & Byers, starts as HP’s non-executive chairman Nov. 1, the same day that Apotheker assumes his post. Apotheker resigned as CEO of German software maker SAP AG in February after the company didn’t extend his contract. He oversaw the software maker’s first decline in revenue since 2003.

Apotheker’s Tenure

“Given his short tenure as CEO of SAP (and one that coincided with a difficult macroeconomic environment), his ability to evolve the strategic direction and deliver top-line growth as a CEO of a large IT company will need to be proven over time at HP,” Morgan Stanley analyst Katy Huberty wrote in a Sept. 30 research note.

Hurd resigned as HP’s chairman and CEO following a company investigation that determined he violated its standards of business conduct. An investigation of sexual harassment allegations found inaccurate expense reports filed by Hurd or on his behalf that concealed a personal relationship with the event organizer and marketing contractor Jodie Fisher.

Glenn Bunting, a spokesman for Hurd at Sitrick & Co., declined to comment.

Lane’s letter came in response to a column published in the New York Times Oct. 8 that called Hurd’s infractions “minor expense account shenanigans.” The column also said that Apotheker was privy to inappropriate downloads of Oracle software code and documents by former SAP subsidiary TomorrowNow that are the subject of a 2007 lawsuit between Oracle and SAP.

Witness List Addition

Apotheker has been added to a list of witnesses that Oracle will likely call in a trial to determine damages in the TomorrowNow case that starts in Oakland, California, on Nov. 1, said SAP spokesman Jim Dever. Apotheker had been on an earlier list of possible witnesses to be called, according to Dever.

Public relations firm Hill & Knowlton, working on Oracle’s behalf, sent an Oct. 6 e-mail to journalists that questioned Apotheker’s ethics in light of the downloads of Oracle documents and code by TomorrowNow workers, which SAP has admitted.

“Oracle is trying to draw Mr. Apotheker into its lawsuit over TomorrowNow,” Lane said. The unit, shut down while Apotheker was SAP’s CEO, wasn’t under his direct supervision, Lane said.

To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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