At the moment, Hewlett-Packard Company (NYSE:HPQ) is a big Q

Posted by Nathan Alexander August 23, 2013 0 Comment 600 views

Hewlett-Packard Company (NYSE:HPQ) is back with a bang on the acquisition platform. On Thursday, the chief executive officer, Meg Whitman said that the company will start looking for acquisitions in the range of $1.5B. She said that over the past few years, the company had made some outsized purchases but that now the strategy has been changed and smaller deals is what they will be aiming for.

The changes

It was just a day ago that she had switched-out on the company’s Enterprise Group chief and stated that HPQ’s 2nd largest unit had dipped on product execution and sales. She also said that the company will be doing deals in the $100M-$300M range and that the company does not really need a 5-6B dollar acquisition. While saying all of this, she also said that that they will not be selling any assets or breaking-up the company.

Another very important point that she brought to the forefront is that HPQ is the one and only companies that can transition seamlessly between services to infrastructure and software and this is where the point of difference lies.

Business strength

Over the last few years, the company has built a strong business that serves corporation software and hardware needs. It has done this via a series of purchases that cost at least $1B. In 2008, it bought Electronic Data Systems, the outsourcing firm and in 2009 it acquired 3Com. Later, in 2010, HP acquired Palm, 3PAR and ArcSight, the security-software maker. Again in 2011, the company bought Autonomy, the big-data analytics company. Of course, it is not like every single one of these deals has turned out the way the HPQ wanted them to turn out. A large part of the Autonomy and the EDS value has had to be written-down.

The days to come

The one more current and evident concern is the company’s fundamental health. The company’s shares plummeted 12.45% in Thursday’s trading even as investors mulled over the dipping margins and a dreary quarterly earnings report. This is a clear-cut indication that HP is cutting prices in a bid to drive sales, not to mention that the outlook for the next year is pretty dismal.

About Nathan Alexander

Nathan Alexander holds bachelor’s degrees in Journalism and European Studies from Boston University. Nathan reports round up the day’s business and financial market news and include keynote interviews with major business players and updates on Asian, European and US stock markets. He has interviewed heads of leading European banking institutions such as European Central Bank President Jean-Claude Trichet and HSBC Chairman Stephen Green, and CEOs from the business world including Microsoft founder Bill Gates, Virgin Chairman Sir Richard Branson and former Porsche President and CEO Dr Wendelin Wiedeking.

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