HP Chairman Defends CEO Apotheker, Blasts Hurd's Cost-Slashing


Ray Lane, non-executive chairman at Hewlett Packard, says critics who lay the blame for HP's recent lackluster quarterly financial performance at the feet of HP CEO Leo Apotheker need to take a chill pill.

In Lane's view, former CEO Mark Hurd's austerity and profit-driven management style harmed HP's ability to innovate, and Apotheker therefore deserves some leeway while he tries to shift the company's focus back to long-term growth.

"Mark Hurd did not invest," Lane said Tuesday in an interview with Reuters. "He burned the furniture to please Wall Street."

HP shares have fallen nearly 12 percent since Apotheker took the helm last Nov. 1. While HP's enterprise storage, servers and networking (ESSN) division has been booming for the past several quarters, its professional services business has left much to be desired.

It's a difficult state of affairs for HP, which spent $13.9 billion to acquire services giant Electronic Data Systems more than three years ago but has yet to blossom into a full fledged services powerhouse.

Apotheker has made boosting HP's services business a top priority, and HP in May moved Technology Services into ESSN. He has also previously alluded to the negative ongoing impact of Hurd's cost-slashing mentality.

"We had a solid strategy for services, but we didn't invest in the parts to support the strategy," Apotheker in May during HP's Q2 earnings call. "Instead, HP focused on maximizing its shorter-term margins. We have over-executed operationally and under-invested strategically."

Lane, who also joined HP's board on Nov. 1, defended Apotheker last October in a letter to The New York Times, calling our Hurd for the misconduct that ultimately caused him to step down as HP CEO last August. Hurd subsequently joined Oracle as co-president.

"In hiring Leo Apotheker, HP's Board turned to a principled leader of outstanding personal and professional integrity,” Lane said in the letter. "Mr. Hurd violated the trust of the board by repeatedly lying to them in the course of an investigation into his conduct."

Lane, is currently a managing partner with venture capital firm Kleiner Perkins Caufield & Byers, and spent eight years as president and COO of Oracle, leaving in 2000.