UPDATED 00:40 EDT / SEPTEMBER 02 2016

NEWS

Report: HPE in talks to sell its software business to Thoma Bravo

Hewlett-Packard Enterprise Co. (HPE) is reportedly holding talks with private equity investment firm Thoma Bravo LLC over the sale of its software business, following rumors of a deal earlier this summer.

The Reuters news agency cites unnamed sources as saying that Thoma Bravo is just one of a number of private equity firms to have made a bid for HPE’s software assets. The report says its bid of between $8 billion and $10 billion was the highest offer. The deal has not yet been finalized, and the sources said it may well be that Thoma Bravo only buys some of HPE’s assets, or none at all.

Earlier reports this summer said that HPE CEO Meg Whitman was looking to sell the software unit – which includes Autonomy, Mercury Interactive and Vertica – in order to double down on areas such as cloud and data center infrastructure.

The latest report comes in the same week as HPE holds its Big Data Conference in Boston, where SiliconANGLE’s TV show theCUBE interviewed a number of company execs and took a closer look at the latest version of its Vertica analytics software. Interestingly, much of the attention at the show was focused on HPE’s software rather than its hardware.

HPE’s ongoing restructuring, which began when it split from HP Inc., its PC and printer arm, is designed to position the company a serious player in new trends such as cloud, data analytics, the Internet of Things (IoT), artificial intelligence (AI), virtualization and software-defined data centers. The company has already spun out its enterprise services business as a separate entity and will soon merge it with Computer Science Corp. (CSC) in a deal that should net HPE around $8.5 billion once it concludes in March 2017. The arrangement means HPE keeps a finger in the services pie while reducing the costs of running the business itself.

It seems HPE wants to do something similar with its software business, which saw some of the firm’s highest declines in its fiscal second quarter results. Revenues slumped by 13 percent, licensing fell by 12 percent and support sales dropped by 16 percent. The company will report fourth-quarter earnings on Sept. 7.

It now appears that under Chief Executive Meg Whitman, HPE is not as dedicated to leading the way in software anymore, Dave Vellante, chief research officer at Wikibon Research and co-chief executive of SiliconANGLE Media, said in an analysis on theCUBE. “It seems that HPE is comfortable being an arms dealer to the cloud, duking it out with Dell,” he said. Co-host Paul Gillin, however, said it’s not apparent why HPE would want to double down on hardware when “it’s clear software is where the growth is going to be, where the margins are.”

The bulk of HPE’s software business was acquired back in 2011, when it bought Autonomy for $11 billion and later Vertica for around $320 million. Mercury Interactive has been around a while longer, with HP snapping it up for $4.5 billion back in 2006.

Neither HPE nor Thoma Bravo would comment on the report.

At HPE’s conference this week, Vellante and Gillin also interviewed Robert Youngjohns, executive vice president and general manager of HPE Software, to get some insight into the unit’s direction and on the software industry at large*:

* Disclosure: TheCUBE was the paid media partner for the conference. Neither HPE nor other sponsors have editorial influence on content on theCUBE or SiliconANGLE.

Image credit: HPE

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