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August 18, 2011

HP closing in on Autonomy buy, planning to spin off PC biz: report

UK software house to join tech giant?

By Steve Evans

HP is set to acquire British software house Autonomy in a $10bn deal, according to reports in Bloomberg. The report also claims HP is planning to spin off its PC business.

According to Bloomberg – who attributed the news to people with direct knowledge of the matter – HP may formally announce the deal as early as today, which would coincide with its latest financial figures.

HP boss Léo Apotheker, who joined last year after Mark Hurd was forced to step down, said he wanted the company to focus more on software and services rather than the relatively low value PC market, where it has been losing out to the likes of Apple. If confirmed, these moves would certainly be a bold step towards that goal.

When CBR profiled HP last year following the Hurd scandal it was suggested by Gartner analyst Martin Reynolds that spinning out its PC division was one possible option for HP. "The company has two directions it can go in," Reynolds told CBR. "It can either continue its strategy of improving efficiency and selling products at decreasing prices to increasing numbers of people, or it can rapidly change direction," he told us.

"Maybe it needs to think seriously about whether it makes sense to remain a massive conglomerate," Reynolds added.

The move would also echo steps taken by rival IBM, when it sold its PC business to Chinese firm Lenovo back in 2004 to focus on becoming a services-oriented company.

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Autonomy is one of the UK’s biggest technology firms. Its most recent financial results revealed a 16% rise in revenue to $256m. Its software is used by the likes of Coca Cola and Nestle and enables organisations to search and sort unstructured information such as emails and other documents.

It recently acquired Iron Mountain’s online backup and recovery, digital archiving and eDiscovery technology in a £380m deal. You can read CBR’s profile piece on Autonomy founder and CEO Mike Lynch here.

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