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HPE CEO Meg Whitman walks the grounds at the Allen Co Sun Valley Conference

HPE Considering Selling Software Assets, Trimming More

July 11, 2016
CEO Meg Whitman continues to push the company to reduce its size and become nimbler to help it better take on rivals like Dell and navigate the changing demands of corporate customers.

Hewlett Packard Enterprise Co. is considering a sale of some of its software assets as it continues to slim down its operations, according to people familiar with the matter.

The divestitures would come from a portfolio of acquisitions made over roughly the last decade, including Autonomy, Mercury Interactive and Vertica Systems, said the people, who asked not to be identified because the matter is private. A sale process is in the preliminary stages and may not result in any deals, the people said.

CEO Meg Whitman has been pushing the company to reduce its size and become nimbler to help it better take on rivals such as Dell Inc. and navigate the changing demands of corporate customers. After splitting from sister company HP Inc. in November, she announced in May she will spin off and merge its business-services division with Computer Sciences Corp. in a deal valued at $8.5 billion for HPE shareholders.

Howard Clabo, a spokesman for HPE, declined to comment.

The overall software business has been showing some improvement. While sales declined 13% in the quarter ended April 30, in constant currency it climbed 2% when adjusted for past divestitures and acquisitions, Chief Financial Officer Timothy Stonesifer said on a call with analysts in May. Operating margins also improved, the company said.

The Autonomy acquisition came under fire soon after the company was purchased for $10.3 billion in 2011. The following year, Hewlett-Packard wrote down $8.8 billion connected to the takeover and said more than $5 billion was the result of accounting practices at the Cambridge, England-based software company. The deal brought legal headaches and is now seen as a key example of an overly aggressive acquisition strategy prior to Whitman’s arrival.

Mercury, which provides tools to measure the effectiveness of clients’ software and technology, was another large acquisition, valued at about $4.5 billion in 2006. It was the largest at the time since the $18.9 billion acquisition of Compaq.

HP spent about $350 million on Vertica, a data-analysis company, in 2011.

Whitman left the door open for more divestitures on the conference call in May.

“Over time, we continue to ensure that we’ve got the right set of assets,” she said. “We’re going to continue to optimize the set of assets that we have, but we’re really happy with the current portfolio.”

By Alex Sherman, Dina Bass and Brian Womack

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Licensed content from Bloomberg, copyright 2016.

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