Computer giant HP has confirmed its intentions to acquire UK software house Autonomy for around $10bn. Autonomy will become HP’s software arm with CEO Mike Lynch remaining in charge, CBR can reveal.
The company has also confirmed it will discontinue its TouchPad tablet device and webOS mobile platform.
CEO Leo Apotheker said during a conference call held to discuss HP’s latest financial figures that HP would continue to run Autonomy as a separate division with founder and CEO Mike Lynch remaining in charge.
A source has since confirmed to CBR that Autonomy will in effect be HP’s new software division and will be run out of the UK. Lynch will report to Leo Apotheker.
The deal will see HP pay £25.50 ($42.11) per share in cash for all outstanding Autonomy shares which represents a 64% premium on Autonomy’s previous closing share price.
"Together with Autonomy, we plan to reinvent how both unstructured and structured data is processed, analyzed, optimized, automated and protected. Autonomy has an attractive business model, including a strong cloud-based solution set, which is aligned with HP’s efforts to improve our portfolio mix. We believe this bold action will squarely position HP in software and information to create the next-generation information platform," said Apotheker.
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"This is a momentous day in Autonomy’s history," said Lynch. "From our foundation in 1996, we have been driven by one shared vision: to fundamentally change the IT industry by revolutionising the way people interact with information. HP shares this vision and provides Autonomy with the platform to bring our world-leading technology and innovation to a truly global stage, making the shift to a future age of the information economy a reality."
Since taking charge of HP Apotheker has signalled his intention to move the company away from its traditional stronghold of PCs to more high-value software and services. He has also confirmed HP will discontinue its TouchPad tablet device after deciding it didn’t want to compete with Apple in that segment.
"The tablet effect is real and sales of the TouchPad are not meeting our expectations," Apotheker said during the conference call. "The impact of the economy has impacted consumer sales and the tablet effect is real and our TouchPads has not been gaining enough traction in the marketplace.
The company is also discontinuing its webOS devices. HP acquired the webOS technology when it bought Palm for $1.2bn a little over a year ago. The company said it would explore strategic alternatives for the webOS software division. The moves are designed to transition HP away from the lower end of the market to higher value and higher margin growth categories, the company said.
HP also said it is considering spinning out its PC business, in a move reminiscent of IBM’s decision to sell its PC arm to Lenovo in 2004. "HP will consider a broad range of options that may include, among others, a full or partial separation of Personal Systems Group (PSG) from HP through a spin-off or other transaction.," said a company statement.
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.
These announcements follow HP’s latest financial figures. Revenue for Q3 stood at $31.2bn, up just 1%. Net earnings rose to $1.9bn.
You can read CBR’s profile piece on Autonomy founder and CEO Mike Lynch here and listen to exlusive podcasts on our multimedia site, CBRTV.
