HPE Continues To Restructure Its Software Business

HPE has completed a massive merger and written down most of what it paid for the acquisition of another software company as the company endeavours to create a pure-play enterprise software powerhouse,

The merger

HPE (this is enterprise business that was created when HP split itself back in 2015) has completed a US$8.8B merger with Micro Focus. That brings SUSE Linux and Attachmate into the HPE family.

The deal creates a workforce of about 4000 people and gives HPE a solid base wth which to compete against other major players and systems integrators in the enterprise software market.

The write-down

Back in 2011, HP purchased British software company Autonomy for a lazy US$11B. Things didn’t go so well for HP (but swimmingly for Autonomy’s shareholders!) with almost US$9M of that written down as the business has not delivered.

The bad news for HPE is that the fallout from that has landed in their lap, including ongoing litigation with the former CEO and CFO of Autonomy.

The fallout

HP is part of the old guard from enterprise IT as it was before the turn of the millenium. And they have struggled to remain relevant as Google and AWS swooped in with their cloud offerings, and Microsoft managed to transform itself into a cloud company.

Micro Focus brings a lot of credibility to the table. Add all that software expertise to HPE’s enterprise hardware business and you can see the pieces coming together for the company to push hard into the enterprise cloud business.

But HP has been notoriously poor at making big mergers work. The $US25B merger with Compaq back in 2002 and the recent write down of Autonomy are cases in point. Successful mergers aren’t about making the smaller partner fit into the larger one. They’re about fusing the best of both entities and creating something new.

Whether HPE has learned that lesson remains to be seen.

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