Will HP Insider Become Next CEO?

It's looking like Hewlett-Packard's board is leaning toward an insider to replace Mark Hurd as CEO.

Among the leading candidates are Todd Bradley and Ann Livermore, The Wall Street Journal reported. Bradley heads up HP's PC business and Livermore is responsible for the company's huge server and services business. Also a contender is Dave Donatelli, who heads HP's storage business, though he is seen as a dark horse. Donatelli, who came to HP from EMC, helped lead HP's bidding war for 3PAR.

The report said HP hasn't ruled out candidates from outside the company. Among those under consideration was Stephen Elop, who was president of Microsoft's business division, where he oversaw the company's Office product group, Dynamics and Office Communications Server businesses. Elop was named CEO of Nokia  two weeks ago.

Meanwhile, HP's former CEO Hurd was front-and-center this week. Hurd has freed himself of HP as the two have settled the lawsuit HP filed against him for joining competitor Oracle.

While the terms of the settlement are confidential, Hurd has agreed to "adhere to his obligations to protect HP's confidential information while fulfilling his responsibilities at Oracle," HP said in a statement. "The agreement also reaffirms HP and Oracle's commitment to delivering the best products and solutions to their more than 140,000 shared customers."

Hurd this week made his first public appearance as Oracle's co-president, when he gave a keynote address at the company's annual OpenWorld conference in San Francisco. His presence and Oracle's focus on new hardware from its Sun Microsystems division is fueling speculation that the company is looking to put itself on a level paying field with IBM and HP, The New York Times reported today.

In a rare move, IBM CEO Sam Palmisano threw himself into the fray, pointing to HP's cuts in R&D spending. In an interview with the Journal, he said: "HP used to be a very inventive company."

According to the report, Hurd slashed HP's R&D budget to $2.8 billion, representing 2.5 percent of the company's revenue, in its last fiscal year from $3.5 billion, or 4 percent of revenue, in 2005 when he took over as CEO. IBM spends 6 percent of revenue on R&D, including $5.8 billion last year.

To be determined: Will HP's next CEO, whoever it may be, revive R&D spending and/or will it spend mightily to shore up its bench via acquisitions? Can HP and Oracle remain true partners given their competitive differences? And despite its detour from Microsoft on the slate PC side with its plan to deliver a Palm webOS based device, will HP turn closer to Redmond to fend off Oracle and IBM?

Posted by Jeffrey Schwartz on September 22, 2010