Mon, Jul 11, 2016 - Page 14 News List

HPE mulls selling some software assets: sources

Bloomberg

Hewlett Packard Enterprise Co (HPE) is considering a sale of some of its software assets as it continues to slim down its operations, people familiar with the matter said.

The divestitures would come from a portfolio of acquisitions made over the past decade, including Autonomy, Mercury Interactive and Vertica Systems, said the people, who asked not to be identified because the matter is private. A sale process is in the preliminary stages and might not result in any deals, the people said.

Chief executive officer Meg Whitman has been pushing the company to reduce its size and become nimbler to help it better take on rivals such as Dell Inc and navigate the changing demands of corporate customers.

After splitting from sister company HP Inc in November last year, she announced in May she would spin off and merge its business-services division with Computer Sciences Corp in a deal valued at US$8.5 billion for HPE shareholders.

HPE spokesman Howard Clabo declined to comment.

The overall software business has been showing some improvement.

While sales declined 13 percent in the quarter ended April 30, in constant currency, it climbed 2 percent when adjusted for past divestitures and acquisitions, chief financial officer Timothy Stonesifer said on a call with analysts in May.

Operating margins also improved, the company said.

The Autonomy acquisition came under fire soon after the company was purchased for US$10.3 billion in 2011. The following year, Hewlett-Packard wrote down US$8.8 billion connected to the takeover and said more than US$5 billion was the result of accounting practices at the Cambridge, England-based software company.

The deal brought legal headaches and is now seen as a key example of an overly aggressive acquisition strategy prior to Whitman’s arrival.

Mercury, which provides tools to measure the effectiveness of clients’ software and technology, was another large acquisition, valued at about US$4.5 billion in 2006. It was the largest at the time since the US$18.9 billion acquisition of Compaq. HP spent about US$350 million on Vertica, a data-analysis company, in 2011.

Whitman left the door open for more divestitures on the conference call in May.

“Over time, we continue to ensure that we’ve got the right set of assets,” she said. “We’re going to continue to optimize the set of assets that we have, but we’re really happy with the current portfolio.”

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