By: Azhar Azam
Inside the 12-months of HP splitting up into two-public industries after quarters of falling revenue: HPE to spin-off and merge its software business with UK-based Micro Focus for $8.8 billion transaction. Micro Focus also confirmed the intent to merge with HPE earlier this month.
In October last year, the Board of Directors approved the separation by means of a pro rate distribution into: HP Inc., the larger of the two, to retain logo and focus on PCs and Printers including 3D Printing business while Hewlett Packard Enterprise (HPE) on Data Storage and Cloud Computing Networks.
The deal would fetch HP a cash payment of $2.5 billion and HPE shareholders to own 50.1% of the new company, Fortune said. This move comes within the four months of HPE announcement to sell out its IT Services unit to Virginia-based Computer Sciences Corporation (CSC) for $8.5 billion.
Both the deals are expected to pull down Hewlett Packard Enterprise business to meager $28 billion, down from $52 billion in the last fiscal year, Salon reported.
In a bid to “smaller is better than to fade away”, Meg Whitman (CEO-HPE) said “I think we are making the right choices. Once the ES-CSC and Software-Micro Focus transactions are complete, HPE will be fast growing, higher-margin, and stronger free cash flow company, well positioned for the future.”
HPE is now more focused to shore up its hardware business as last year; it acquired Aruba Networks for $3 billion, the second largest Wi-Fi networks provider after Cisco. Last month, it also announced to purchase Silicon Graphics for $275 million, a servers and storage networks seller.
While HPE is converging on getting smaller, its major rival “Dell”; is expanding its processing hardware business. Michael Dell’s Texas tech company finalizes $60 billion deal to acquire EMC group, termed to be the largest technology-merger.
Whitman thinks otherwise. “The next five years is going to belong to the nimble, the fast and the focused", Whitman told CNBC. “So the contrast with Dell could not be more stark. They are bigger, we are getting smaller.”
HP Inc., announced in a press release on September 12, a definitive agreement to acquire Samsung Electronics Co. Ltd.’s printer business for a deal valued at $1.05 billion. The acquisition intends to accelerate disruption of $55 billion copier segment and aims to reinvent and replace service-intensive copiers with superior multifunction printing, HP added.
Samsung earned revenue of 2-trillion won ($1.8 billion) in 2015 from printing business with 6,000 employees, a production base in China as well as more than 50 sales offices globally. However the agreement will allow Samsung to source printers from HP and market in Korea under Samsung brand.
This value is just a fraction of HP Inc.’s printing business of $21.2 billion in 2015 (down from $23.2 billion in 2014) but talking with the Fortune, Dion Weisler (CEO-HP Inc.) hoped that “the deal would help HP better compete in the copy machine market and help off-set declining sale of printers”.
HP Inc. Fiscal 2015 Full Year Results
The net revenue of HP Inc. declined by nearly 7%; to $107.1 billion in 2015 from $115.1 billion in 2014. The revenue by segment on year-over-year was (ended on October 31):
Personal Systems
Notebooks ($17.2 billion; down from $17.5 billion)
Desktops ($10.9 billion; down from $13.2 billion)
Workstations ($2.0 billion; down from $2.2 billion)
Other ($1.2 billion; down from $1.3 billion)
Printing
Supplies ($13.9 billion; down from $14.9 billion)
Commercial Hardware ($5.3 billion; down from $5.9 billion)
Consumer Hardware ($1.8 billion; down from $2.3 billion)
Enterprise Group
Industry Standard Servers ($13.4 billion; up from $12.4 billion)
Technology Services ($7.6 billion; down from $8.3 billion)
Storage ($3.1 billion; down from $3.3 billion)
Networking ($2.8 billion; down from $2.6 billion)
Business Critical Systems ($807 million; down from $929 million)
Enterprise Services
Infrastructure Technology Outsourcing ($12.1 billion; down from 14.0 billion)
Application and Business Services ($7.7 billion; down from 8.3 billion)
Others
Software ($3.4 billion; down from $3.7 billion)
HP Financial Services ($3.2 billion; down from $3.5 billion)
Corporate Investments ($27 million; down from $302 million)
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| Meg Whitman - Image Credit: Getty/Jewel Samad/Saloon |
In October last year, the Board of Directors approved the separation by means of a pro rate distribution into: HP Inc., the larger of the two, to retain logo and focus on PCs and Printers including 3D Printing business while Hewlett Packard Enterprise (HPE) on Data Storage and Cloud Computing Networks.
The deal would fetch HP a cash payment of $2.5 billion and HPE shareholders to own 50.1% of the new company, Fortune said. This move comes within the four months of HPE announcement to sell out its IT Services unit to Virginia-based Computer Sciences Corporation (CSC) for $8.5 billion.
Both the deals are expected to pull down Hewlett Packard Enterprise business to meager $28 billion, down from $52 billion in the last fiscal year, Salon reported.
In a bid to “smaller is better than to fade away”, Meg Whitman (CEO-HPE) said “I think we are making the right choices. Once the ES-CSC and Software-Micro Focus transactions are complete, HPE will be fast growing, higher-margin, and stronger free cash flow company, well positioned for the future.”
HPE is now more focused to shore up its hardware business as last year; it acquired Aruba Networks for $3 billion, the second largest Wi-Fi networks provider after Cisco. Last month, it also announced to purchase Silicon Graphics for $275 million, a servers and storage networks seller.
While HPE is converging on getting smaller, its major rival “Dell”; is expanding its processing hardware business. Michael Dell’s Texas tech company finalizes $60 billion deal to acquire EMC group, termed to be the largest technology-merger.
Whitman thinks otherwise. “The next five years is going to belong to the nimble, the fast and the focused", Whitman told CNBC. “So the contrast with Dell could not be more stark. They are bigger, we are getting smaller.”
HP Inc., announced in a press release on September 12, a definitive agreement to acquire Samsung Electronics Co. Ltd.’s printer business for a deal valued at $1.05 billion. The acquisition intends to accelerate disruption of $55 billion copier segment and aims to reinvent and replace service-intensive copiers with superior multifunction printing, HP added.
Samsung earned revenue of 2-trillion won ($1.8 billion) in 2015 from printing business with 6,000 employees, a production base in China as well as more than 50 sales offices globally. However the agreement will allow Samsung to source printers from HP and market in Korea under Samsung brand.
This value is just a fraction of HP Inc.’s printing business of $21.2 billion in 2015 (down from $23.2 billion in 2014) but talking with the Fortune, Dion Weisler (CEO-HP Inc.) hoped that “the deal would help HP better compete in the copy machine market and help off-set declining sale of printers”.
HP Inc. Fiscal 2015 Full Year Results
The net revenue of HP Inc. declined by nearly 7%; to $107.1 billion in 2015 from $115.1 billion in 2014. The revenue by segment on year-over-year was (ended on October 31):
Personal Systems
Notebooks ($17.2 billion; down from $17.5 billion)
Desktops ($10.9 billion; down from $13.2 billion)
Workstations ($2.0 billion; down from $2.2 billion)
Other ($1.2 billion; down from $1.3 billion)
Printing
Supplies ($13.9 billion; down from $14.9 billion)
Commercial Hardware ($5.3 billion; down from $5.9 billion)
Consumer Hardware ($1.8 billion; down from $2.3 billion)
Enterprise Group
Industry Standard Servers ($13.4 billion; up from $12.4 billion)
Technology Services ($7.6 billion; down from $8.3 billion)
Storage ($3.1 billion; down from $3.3 billion)
Networking ($2.8 billion; down from $2.6 billion)
Business Critical Systems ($807 million; down from $929 million)
Enterprise Services
Infrastructure Technology Outsourcing ($12.1 billion; down from 14.0 billion)
Application and Business Services ($7.7 billion; down from 8.3 billion)
Others
Software ($3.4 billion; down from $3.7 billion)
HP Financial Services ($3.2 billion; down from $3.5 billion)
Corporate Investments ($27 million; down from $302 million)