Hey HP: You may not rate Autonomy, EDS, but buyers do
VCs are circling, true, but so are tech firms - reports
Potential buyers are probing Hewlett-Packard over EDS and Autonomy, according to reports.
The Wall St Journal says overtures have come mainly from other US tech companies or their representatives.
According to Reuters, HP regularly gets touched up by bankers, representatives from private equity and technology companies but enquiries have increased since it emerged Dell’s in talks with Silver Lake about a possible $15bn buyout.
HP in its 10-K filing said it was evaluating the potential disposition of assets and businesses that “may no longer help us meet our objectives".
EDS and Autonomy are prime targets for buyers, both being outside HP’s core PC, server and printer business and both coming into the company through departed CEOs, the result of wild strategy swings, and at great cost. EDS was bought for $13.9bn in 2008 by Mark Hurd to turn HP into a services company but four years later HP wrote $8bn off of the deal. Under Hurd's replacement, Leo Apotheker, software was the new future. The firm went on to spend $11.7bn on UK enterprise search specialist Autonomy in 2011 but that deal was also written down - also to the tune of $8bn.
In November, HP accused Autonomy of accounting impropriety and of misrepresenting its value during the purchase, and referred the matter to UK and US regulators. Autonomy’s founder and former CEO Mike Lynch - aka: "the British Bill Gates" - has denied any wrongdoing.
HP is in the midst of a corporate turnaround and restructuring under current chief executive Meg Whitman - who has said that she doesn’t expect it to pay off until 2016.
Announcing the strategy and justifying the long turnaround time, Whitman said: “My belief is that the single biggest challenge facing HP has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices and frankly some significant executional miscues.”
Whitman appeared to be referring to Autonomy, EDS and their CEO sponsors. Autonomy and EDS are prime candidates for sale to either private equity or another tech company - either one within the sector which is looking for expertise or customers or trying to break in.
That said, it’s not like the PC business is a particularly healthy segment for HP to remain in - at least without any major changes. Global sales are falling and during HP’s most recently reported quarter, revenue for the Personal Systems Group (PSG) fell 14 per cent year on year; the unit's business and consumer sales were down 13 per cent and 16 per cent respectively.
On Tuesday, Gartner reported that although HP was seated at the top of the PC heap - it has become a dwindling one. Also, PC-makers' last hope, Microsoft’s Windows 8 operating system, resolutely failed to reignite sales during the fourth quarter covering Christmas, the analyst explained. According to Gartner, Microsoft's brand-new operating system: "Did not have a significant impact on PC shipments in the fourth quarter." ®