Several investment bankers are willing to write Meg Whitman a check in exchange for some of Hewlett-Packard’s underperforming subsidiaries, an anonymous insider tipped off Bloomberg this week.
“The company has seen an increase in inquiries after a regulatory filing late last year that said it would consider disposing of businesses that don’t meet goals, said the person, who asked not to be identified because the overtures were private. The Wall Street Journal earlier reported today that Hewlett-Packard’s Autonomy and Electronic Data Systems divisions had attracted interest from possible suitors.”
As of October 2012, Hewlett-Packard’s official stance is that there are no plans to sell off EDS. But that may only be the case because the vendor is trying to cut its losses and make the services business a more attractive acquisition target. It would make sense, considering that the hardware maker shed out $13.9 for the firm in 2010 and had to write down $8 billion on the deal just two years later.
Autonomy is another example of a botched acquisition: the UK analytics firm’s valuation was artificially inflated ahead of the buy, and the subsequent write off left a $9 billion dent in HP’s last earnings report.
Wall Street had every reason to take note of the regulatory filing that HP filed in December. Meg Whitman has indeed made it very clear that she is trying to do something about the $17 billion the vendor lost under her reign, but the situation is not as black as white as it may seem.
Firstly, the technology developed by Autonomy has become a central pillar of HP’s enterprise strategy – parts of firm’s portfolio have already been incorporated into Hewlett-Packard’s line-up. And secondly, it’s highly likely that Whitman will sell off her company’s low-margin consumer business before cleaning house with the potentially more promising services and software.