In a brief write-up of HPE/Micro Focus from Paul Kunert:
Shareholders will also be asked to approve a $500m return of value, approximately $2.09 per share,” the statement to the City added.
Well, who doesn’t like money?
That said, performance is declining:
The [HPE Software?] business has shrunk in recent years, with turnover dropping from $4.06bn in fiscal 2012 ended 31 October to $3.19bn in fiscal 2016. Profit before tax during that period slipped too. In HPE’s Q1 ended January, sales in the software arm fell 8 per cent year-on-year to $721m.
All that M&A didn’t work out too well:
The software division at HPE is made up of a collection of separate units including Autonomy, Mercury Interactive, ArcSight, three businesses that alone cost HPE more than $16bn to acquire. Other elements include Vertica (buy price undisclosed) and relatively smaller IT management ops outfits.
For more context, see my notebook on the HPE/Micro Focus merger back in September, 2016.
Source: HPE dumps Grandpa Software in Micro Focus care home, hightails it
Some crisp HPE strategy coverage from Chris Evans at El Reg:
HPE is remaining part of the CSC and Micro Focus businesses by having a shareholding in the new organisations. It’s fascinating to think what this might mean going forward. It’s like neither business wants to fully commit to where future revenue for their business may lie. I say this because I can only assume that infrastructure sales will become a dwindling business as companies move to public cloud; it doesn’t seem to be enough that infrastructure alone will keep businesses buying on-site solutions.
And, a nice summing up of the HP master plan:
Effectively Meg Whitman is unravelling some of the bad decisions of the last few years, including the purchase of Autonomy and acquisition of EDS in 2008. There’s more focus on delivering infrastructure to clients, rather than moving revenue to services – remember HPE’s public cloud offering was also culled at the beginning of 2016.
While HPE is getting $2.5bn in cash, the whole deal value is more like $8.8bn, the non-cash being stock. More details:
- “Under the deal, HP Enterprise shareholders are expected to end up with Micro Focus shares currently valued at about $6.3 billion. Micro Focus will pay HP Enterprise $2.5 billion in cash.” (WSJ)
- There’s about 12,000 people in HPE Software. (WSJ)
- HPE Software revenue: “HPE’s software unit generated $3.6 billion in net revenue in 2015, down from $3.9 billion in 2014.”
- Put another way, from TBR: “2Q16 software revenue [had a] decline of 18% year-to-year, driven down by a license revenue decline of 28% year-to-year.”
- HPE has been divesting a lot, getting a hoard of cash: “In earlier transactions, HP Enterprise in May completed a $2.3 billion deal in China to sell a 51% stake in a venture there called H3C that sells networking, server and storage hardware and related services. Later the same month, HP Enterprise announced a deal to spin off a computer services business that employs about 100,000 people—two-thirds of the company’s total head count—and merge it with operations of Computer Sciences Corp.”
- Also: “The company sold at least 84 percent of its 60.5 percent stake in Indian IT services provider Mphasis Ltd to Blackstone Group for $1.1 billion in April.”
What now for HPE?
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