HP Enterprise: Selling Autonomy, Mercury, Vertica Software Businesses?
Updated Sept. 7, 2016: HPE Confirms Software Spin-Off Plans.
Overall, HPE’s business has improved dramatically in recent quarters. And the software business has also showed some improvement. But in the worlds of cloud, SaaS and recurring subscription revenues, the company has been a laggard.
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HPE CEO Meg Whitman and other company executives attempted to put a positive spin on the situation during a quarterly earnings call in May. At the time, Whitman said: “Our Software business also delivered a strong quarter. When adjusted for divestitures and acquisitions, software delivered its third consecutive quarter of constant currency growth.”
Take closer look at the figures and software revenues actually declined 13% year-over-year as reported or 10% in constant currency, HPE conceded. “However, software was up 2% in constant currency when adjusted for acquisitions and divestitures,” CFO Tim Stonesifer said on the call. “Sales strength in security and big data was partially offset by declines in IT Management. On a product level, we had encouraging results in Voltage, Fortify and IDOL.”
Still, HPE’s software progress is painfully weak compared to accelerating subscription businesses at Amazon, Microsoft, Oracle, Saleforce and many other cloud-centric software providers.
HPE Buying (Then Selling) Software Companies?
HP Enterprise previous iteration — Hewlett Packard Co. — spent heavily to bolster its software business over the past decade. But the results have been mixed to poor. HP’s acquisitions included:
- Autonomy for $10.3 billion in 2011, but HP ultimately wrote down nearly $9 billion associated with the deal.
- Mercury for $4.5 billion in 2006.
- Vertica for $350 million in 2011.
HPE declined to discuss whether it is seeking buyers for Autonomy, Mercury Interactive and/or Vertica, according to Bloomberg.
Selling off some or all of those businesses could allow HPE to tighten its focus on hyper-converged data centers and next-generation technologies. Chief among them: The Machine, a potential IBM Watson alternative that HPE already is advertising on TV — even though the technology is not yet available for sale.
HPE vs Dell: Focus, Focus, Focus
Dell has already taken similar steps ahead of its $67 billion buyout of EMC, which is expected to be finalized later this month.
In recent weeks, Dell has sold off its software business — including Quest Software and SonicWall — to Francisco Partners and Elliott Management Corp.