If you believe what I have said then that only leaves the small matter of execution.įor the first time, we are seeing a Leo Apotheker that was noticeably absent during his time as CEO at SAP. Meanwhile, they’ve clung onto their enterprise IT and services businesses and are slowly rolling out some meaningful strategies that can leverage their global presence, their industry strengths and massive footprint of enterprise clients. Let’s be honest – could we really see HP giving Apple and Google a run in the consumer space? Was HP really in the right shape to lead PC sales in a fast-commodotizing market? If HP had continued down its confused previous path, it would surely have faced being broken up and spun-off into all sort of assortments and flavors. In one full swoop, Léo’s sent his firm on a path where we can actually understand what HP’s game-plan is all about. Once again, when you step back, the answer is yes. If that's the case then I don't doubt Apotheker will have little difficulty finding rock star sales people who understand complex deals and are eager to earn good money from big ticket sale.ĭoes it make sense for HP in the long term? Some have argued that educating HPs bag carriers on what will now be a complex sale might be too much for them. He knows the score and the penalties in store if he gets it wrong. As he should given the extent of problems this last quarter revealed.Īpotheker can draw on his experience in building a software and services model and apply that to the strategy he has put in train while having no qualms about workforce changes that may be necessary in the interim. One interpretation might be that Apotheker is being relatively conservative, sticking to things he readily understands and banking upon a safe bet. When you add up all the moving parts, throw in the fact HP is ring fencing this unit,taking advantage of Autonomy's leadership experience in transformational change and flavor with Apotheker's many successful years as a software salesman then you start to see a cocktail that could turn out to be very sweet. Viewed in those terms, HP got it about right.ĭoes the deal make sense in the context of transformation? When I look at 's market cap at $15 billion, can anyone say for certainty that if it came up for sale it would not be looking at $20 billion plus as a figure guaranteed to attract investor attention? Even today, its cap implies a revenue multiple of 6.5. If you agree with that assessment then HP is paying about the right price. I regularly see SaaS businesses which think they can be valued at 9-10x revenues although recently that has slipped back to 7x on the basis of deals on the table. The premium therefore is pretty hefty at some 61% of yesterday's close price. Where at one time it was valued close to $7 billion recent weeks have seen that valuation knocked back to something around $6.2 billion. Autonomy's share price has been on the slide since its last earnings announcement.
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