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HP's Apotheker: Software Key to Future

PALO ALTO, Calif. (TheStreet) -- HP's (HPQ) new CEO Léo Apotheker has vowed to make the tech giant's software business a top priority, and also believes that the computer and server maker is currently undervalued.

"HP is grounded in the hardware business," he said during a conference call with analysts on Friday. "I bring to HP an asset that that HP is less grounded in, and that's software."

Leo Apotheker
Leo Apotheker, HP's new CEO

Apotheker, a 20-year veteran of German software giant SAP (SAP), also highlighted his experience in "value-added services," but software was a recurring theme during the conference call.

"I believe, and the management believe, that HP should be more valuable than the sum of its parts," he added. "We all believe that software is the glue to make that happen."

The former SAP CEO would not reveal specific details of his software strategy, but he is widely expected to bolster HP's OpenView systems management product against rival IBM's (IBM) Tivoli offering.

HP has already lauded Apotheker's software track record. In a statement released after the market close on Thursday, HP explained that he helped lead SAP to 18 consecutive quarters of double-digit software revenue growth.

Apotheker, however, now faces the challenge of inspiring HP investors. HP's stock has fallen more than 20% this year, thanks partly to the shock departure of former CEO Mark Hurd following an expenses scandal. Hurd, who was credited with turning HP's fortunes around, was something of a Wall Street darling, and earned plaudits for his tight expense control.

At least initially, investors have been largely underwhelmed by HP's new CEO hire. The tech bellwether's stock was down $1.04, or 2.47%, to $41.03 shortly after market open, despite a modest gain in tech stocks that saw the Nasdaq rise 0.63%.

"I happen to believe that [HP] is a company with a lot more value than is currently attributed to it," said Apotheker, during the conference call, highlighting HP's strong balance sheet, properties and people.

HP exited its third quarter with cash and investments of $14.8 billion and has also been on something of an acquisition tear recently, buying security specialist ArcSight (ARST) for $1.5 billion and out-muscling Dell (DELL) for storage maker 3Par. (PAR)

Apotheker, a German national who is said to be fluent in five languages, also highlighted his international experience as a big plus for HP.

"One of the abilities that I have is that I am a global citizen," he said. "HP is very focused to expand its markets; we want to expand faster in the emerging markets."

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