Hewlett Packard Enterprise Co (HPE) is to spin off a big chunk of its business software line-up in an US$8.8 billion deal with Micro Focus International PLC, continuing the unraveling of what once was Silicon Valley’s largest company.
The company on Wednesday said that it is to get a US$2.5 billion cash payment and its shareholders are to hold a 50.1 percent stake in the new combined company.
HPE is spinning off units including application delivery management, big data and enterprise security. The company plans to focus on selling data-center hardware and other commercial tech gear to other big organizations.
Micro Focus, based in Newbury, England, said the surviving company would have annual revenue of about US$4.5 billion.
The software spinoff marks another step in HPE chief executive officer Meg Whitman’s effort to transform the once-mighty technology conglomerate into a leaner, more efficient company catering to a few core markets that she believes will be most likely to grow in the future.
After its shake-up is completed, HPE expects to have about US$28 billion in annual revenue, down from US$52 billion in its last fiscal year.
The deal with Micro Focus still requires antitrust approval. If all goes as anticipated, it should close sometime between April and October next year.
Separately HPE reported better-than-expected earnings in its fiscal third quarter ended July 31. Net income soared to US$2.27 billion, or US$1.32 per share, thanks to a hefty gain on an asset sale. Earnings, adjusted for the gain and restructuring and other costs, were US$0.49 per share.
Revenue slipped about 6 percent year-on-year to US$12.21 billion.
For the current quarter ending in October, HPE expects its per-share earnings to range from US$0.58 cents to US$0.63. The company expects full-year earnings in the range of US$1.90 to US$1.95 per share.
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