HP’s Donatelli wins 3PAR, status as CEO candidate

HP’s Donatelli wins 3PAR, status as CEO candidate

New York: Hewlett-Packard Co’s fierce bidding war against Dell Inc for 3PAR Inc raised the profile of the once-obscure data storage business, and along with it the stature of HP executive Dave Donatelli.

Donatelli, who as head of enterprise servers, storage and networking marshaled the winning bid, is seen as one of the candidates to succeed Mark Hurd, the high-profile HP chief who stepped down on 6 August after a probe into his relationship with a contractor.

The 45-year-old Donatelli is known among former colleagues and analysts as an aggressive and highly effective executive who was schooled by the hard-driving culture of EMC Corp, his former employer and bigger rival to 3PAR.

Donatelli’s strength is his knowledge of enterprise technology like storage and networking, where HP is seeking to expand and faces tough competition from other large vendors like IBM and Cisco Systems Inc.

“He’s technically very strong in terms of being able to run very large-scale engineering," said Highland Capital Partners’ Peter Bell, who used to work with Donatelli at EMC.

A graduate of Boston College with an MBA from Northwestern University’s Kellogg School of Management, Donatelli spent 22 years at EMC before joining HP last year, a move that prompted a lawsuit by EMC.

Some analysts said that he may not be chosen for the CEO role this time around because it has been only a year since he joined, and the board may want a more veteran HP executive like Ann Livermore, who oversees the overall enterprise business, or Shane Robison, chief strategy and technology officer.

But they said Donatelli’s relative youth means he is likely to eventually get the job, and his success at steering its bid for 3PAR lends him more credibility as a future leader.

Battle of the biggest

While 3PAR would still be a small part of HP’s $115 billion-a-year business, the aggressive bidding war showed how crucial data storage is becoming as increasing volumes of emails, online video and electronic business transactions put a strain on corporate data centers.

Some say having storage technology, along with servers and networking equipment, could mean the difference between becoming one of the top five technology vendors in the long run alongside IBM and Cisco, or a mere secondary supplier.

Analysts said Donatelli’s experience in M&A and bringing new technologies to the business will help HP compete with IBM and others that are expanding into new products and services.

“It’s all about convergence, consolidation, and he’s at the center of all that," said one analyst at an investment firm that owns HP shares.

The analyst, who declined to be named, also said investors were unlikely to criticize Donatelli for the high price for 3PAR -- more than three times what it was worth before Dell’s first public bid -- as long as the overall company keeps growing.

Wedbush Securities analyst Kaushik Roy was more critical, saying HP was spending too much and was better off buying other, cheaper companies. But he also rated Donatelli, whom he had worked for at EMC, as a person who could get things done.

“He grew up at EMC. And EMC was a small company that grew very fast, because it has good technology and aggressive sales people. Donatelli is like that -- he’s an aggressive guy and he can execute," he said.

Donatelli also led HP’s acquisition of network equipment maker 3Com, a $2.7 billion deal that helped it expand into routers and switches and boost its presence in China, one of the world’s fastest-growing markets.

That deal pitted HP against Cisco, previously a resale partner. Cisco has in turn entered HP’s territory of servers.

Such encroachments are now increasingly common as vendors try to become one-stop shops for their clients’ technology needs. That means whoever leads HP must be able to strike a delicate balance between aggressive dealmaking and cooperating with partners, analysts said.

Highland Capital’s Bell said Donatelli, whom he described as a straight talker and solid decision maker, had the right character for the job.

“When you have thousands of people working for you, do they believe in what you’re telling them? Can you build a good team, and can you hire executives well? Are you good in front of customers? Are you technically strong? Those are all things that Dave’s got," he said.

Hurd was credited with resuscitating HP through bold acquisitions and cost cuts, helping transform the company into the world’s largest tech company by revenue. He shocked Silicon Valley by resigning last month in a cloud of scandal surrounding inaccurate expense reports related to a female marketing contractor.