According to Bloomberg, Hewlett-Packard needs to spend as much as double the historical valuation for software takeovers to catch up in cloud computing.
Although Apotheker said this month he will follow a “disciplined” approach to acquisitions for Hewlett-Packard, he may be forced to pay up to offset cuts in development spending by ousted CEO Mark Hurd and close the gap with Oracle and IBM in cloud computing. – Bloomberg
After Hurd’s exit, HP spent around $2.1 billion including net debt on data-storage company 3Par after an 18-day bidding war against Dell. According to data compiled by Bloomberg, the 325 times Ebitda that HP’s interim CEO Cathie Lesjak offered for 3Par was the most expensive valuation for any computer takeover greater than $500 million. Apotheker started as CEO less than two months later and said on March 14 in San Francisco he plans a “disciplined” acquisition approach while shopping for targets in areas including security, data analysis and cloud computing.
During an interview on March 15 Shane Robison, HP’s chief technology and strategy officer who heads mergers and acquisitions, said Apotheker is aiming to build a cloud computing service that would let software developers write, test and run applications securely in its data centers using a suite of Hewlett-Packard technology. To do that, the company needs to buy, build, or strike partnerships for database software, data analysis applications, software development tools and security software.
Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco said “The message is growth, and if they’re going to go for small, high-growth companies, they’re going to have to pay up. Hopefully not as much as 3Par.”
According to research from Goldman Sachs, HP may have a high interest in Red Hat, the largest seller of Linux software; Informatica, the Redwood City, California-based corporate-software company; and Tibco a business- software developer in Palo Alto.