HPE Eying Final Shift: A Sale to a Private Equity Firm - The UpStream

HPE Eying Final Shift: A Sale to a Private Equity Firm

posted Sunday Jul 31, 2016 by Scott Ertz

HPE Eying Final Shift: A Sale to a Private Equity Firm

The landscape of the computer industry has changed a lot over the decade or so. IBM, the company responsible for personal computers, no longer makes or sells them, selling that division to Lenovo. Compaq, the company that created the IBM-compatible marketplace, was absorbed into HP. Dell, once the leader in computer sales, dropped and went private. Sony got out of the business entirely, spinning Vaio off to its own company. Hewlett Packard, formerly the first name in consumer sales, is now 2 companies, and one of them is not doing well.

Hewlett Packard Enterprise, better known within the industry as HPE, has had nothing but trouble since the company split. A seemingly constant shift in strategy, focus and management has shown a panic within HPE's board of directors, and this week's revelation shows they fear there is no hope for success.

Reports coming from several sources within the company suggest that HPE is currently considering a Yahoo-style selloff. This could be individual business units, or potentially the business as a whole. Included in the consideration is Autonomy, the disaster purchase that was masterminded by ousted CEO Leo Apotheker. Falsified revenue and internal dealings eventually led, in part, to Apotheker's firing, and the beginning of HP's current issues. Other software-based companies that have been acquired recently are on the table, including Mercury Interactive and Vertica. Those units could fetch between $6 and $8 billion.

Other options include selling the entire company, warts and all, to a private equity firm collective, members including Apollo Global Management, Carlyle Group and KKR. This would allow the company to try its luck at a turnaround without the need to answer to public and myriad shareholders, instead only being responsible to the collective. This is the same move that Dell made 3 years ago, which has, as far as we can tell, been on track for success.

HPE is a different type of company, though. While Dell dabbles in the enterprise space, it also has a very public face. HPE, on the other hand, is ONLY the enterprise aspect of the former Hewlett Packard corporation. Will the same move work as well for the enterprise-only corporation, or will it ensure HPE's ultimate destruction? Let us know your thoughts in the comments.


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