HP acquisitions - The good, the bad and the ugly
HP released its fourth-quarter financial results ahead of schedule this week, and more surprising than its £4.3 billion loss were the allegations of "serious accounting improprieties" at UK software firm Autonomy prior to the acquisition. These alleged improprieties led HP to take a non-cash impairment charge of £5.5 billion.
Join us as we look back at some of HP's more well-known acquisitions, and judge how well, or badly they have gone.
1. HP acquisitions: The good, the bad and the ugly
HP released its fourth-quarter financial results ahead of schedule earlier this week, and more surprising than its £4.3 billion ($6.9 billion) loss were the allegations that UK software firm Autonomy had failed to disclose "serious accounting improprieties" prior to the acquisition, leading HP to take a non-cash impairment charge of £5.5 billion ($8.8 billion). Join us as we take a look back at several of HP's more well-known acquisitions, and how well, or badly they have gone.
2. 2002: Compaq
HP acquired PC manufacturer Compaq in 2002 for $25 billion. Despite being the largest PC manufacturer in the world, slowing PC sales prompted HP to announce plans to get out of the PC business in 2011. In September 2012 HP ousted CEO Leo Apotheker and in October reversed the PC spinoff, saying it would have cost $1.5 billion in one-off charges and a further $1 billion a year thereafter.
3. 2006: Mercury Interactive
In 2006, HP acquired software company Mercury Interactive for $4.5 billion. Mercury's application management products are now sold by HP's Software Division as part of the business technology optimisation (BTO) portfolio. HP's software revenue has continued to grow, although its profit margin is still much lower than the Personal Systems or Services divisions.
4. 2007: Neoware
Thin client manufacturer Neoware was purchased by HP in 2007 for $241 million, as part of HP's general push towards thin client virtualised business desktop PCs.
5. 2008: Electronic Data Systems
While the acquisition of technology consulting service Electronic Data Systems (EDS) for $13.9 billion in 2008 was meant to boost HP's IT outsourcing portfolio by combining HP's services portfolios with EDS's delivery platforms, in practice, the purchase has been criticised as being too expensive. HP has had to deal with the gradually diminishing value of EDS and absorb nearly $8 billion in non-cash charges.
6. 2010: Palm, Inc.
Two years ago, when HP paid £800 million to acquire Palm Computing, its innovative webOS multi-touch technology was considered very promising. However, despite the hopes of Palm fans, HP's webOS-powered TouchPad tablet failed and HP did a complete about-turn and decided to exit the tablet business, including the webOS hardware business. In September 2012, HP finally released webOS under an open source licence. The mess-up with Palm cost HP nearly $900 million last year.
7. 2010: 3PAR
In 2010, HP also won a bidding war against Dell to acquire virtualised storage vendor 3PAR for $2.35 billion. HP has integrated 3PAR's storage technology into the storage and network stack of its converged infrastructure portfolio, as part of HP's cloud computing services. While the impact of HP's cloud computing strategy on the market has yet to be determined, the Converged Cloud framework could have what it takes to help turn HP's fortunes around.
8. 2010: ArcSight
HP's acquisition of security vendor ArcSight for $1.5 billion in 2010 was part of a growing trend of IT leaders purchasing security providers. In true HP style of course, ArcSight was bought at a 70% market value premium, compared to its value a month before the acquisition. Arsight's products have joined HP's Enterprise Security Solutions portfolio, which helps businesses deal with BYOD, cloud and social media security threats.
9. 2011: Autonomy Corporation
Last year, under the leadership of former CEO Leo Apotheker, HP announced it would purchase UK software vendor Autonomy for a cool £6.7 billion. HP was roundly criticised for having paid far too high a price by many, including IBM. Oracle also famously called Autonomy's CEO Mike Lynch a liar for denying that Autonomy had been "shopped" to Oracle prior to the acquisition. Now, almost six months after Mike Lynch left Autonomy, HP has accused Autonomy accounting fraud, despite having 300 auditors from Deloitte and KPMG check the books.
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