NEW YORK (AP) — Hewlett-Packard Co.'s new CEO signaled Friday that expanding the company's software business will be a top priority.
HP announced the hiring of Leo Apotheker, the former head of business software maker SAP AG, late Thursday. On a conference call Friday morning, Apotheker called software the "glue" that holds together the different parts of the company.
"Software is how we can make sure that the various parts of our technology actually fit well together," he said.
HP has been trying to build on its personal computer and printer businesses by expanding into technology services, data storage and security.
Analysts have questioned the hiring of a CEO who resigned abruptly from his last job after less than two years in the position.
But the company defended its pick Friday, saying Apotheker was the only candidate offered the CEO job.
HP Director Robert Ryan pointed out that Apotheker helped SAP post 18 consecutive quarters of double-digit growth in software revenue between 2004 and 2009.
Thursday's announcement caught almost everyone off guard, causing HP's shares to slip back into a funk that began in early August after the board ousted the well-regarded Mark Hurd amid allegations of sexual harassment and deceptive expense reports.
In morning trading, HP shares were down $1.26, or 3 percent, at $40.81.
Most analysts had expected HP to hire from within, or tap an outsider with a more impressive resume than Apotheker's.
"I thought it would be difficult for HP to hire an outsider and have its stock to go down, but this board seems to have found a way," Gleacher & Co. analyst Brian Marshall said.
Apotheker, a 57-year-old German, spent most of his career at SAP AG before being promoted to CEO in April 2008. SAP decided not to renew his contract when it expired nearly eight months ago, largely because SAP's financial performance faltered after Apotheker raised the fees that the company's customers paid to maintain and upgrade software.