It’s taken the rumor-mill longer than usual to crank up this year. However, it’s finally shifted-up a few gears as we now hear whispers that HP has found buyers for Autonomy and EDS. We stress again that this is the rumor mill in full operation, so proceed with caution.
HP Selling Autonomy?
The rumors started in the Wall Street Journal and cited people familiar with the discussions that the beleaguered tech giant has been on the receiving end of a number of overtures from other US tech companies interested in buying one, or both of these companies.
According to the reports, the number of potential buyers increased after the December 28th 10-K filing in which in which it said that it was “… continuing to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives.”
There’s nothing like a rumor to inflate or decimate share prices, and if you were cynical, as indeed you might be in this case, then you might think HP had planted the rumor itself as its share price closed 4.1% higher last night at US$ 17.20.
We’re not suggesting that this is the case, but even the suggestion that it might be dropping these two assets already has some Wall Street investors rubbing their hands.
But let’s take a quick reality-check here, stand back and look at the situation -- any company in the US or otherwise seriously considering an Autonomy buy seems far-fetched at the moment. HP is only in the pre-preliminary stages of a very lengthy and costly lawsuit around the allegations that former management in Autonomy cooked the books.
Even in an industry known for its eccentrics and crazy acquisition strategies -- and I’m talking the IT industry here -- it seems unlikely that any company would take this trouble on themselves before it has even started. Add to this the fact that the price of Autonomy has already been written down by over US$ 5 billion, and you have an owner that is not likely going to sell unless it can make something back.
Also to be kept in mind is the fact that the IDOL product is already being integrated in many of HP’s other lines of technology and secondly, CEO Meg Whitman has already said in the past that she is not selling Autonomy. That is not to say that other elements of HP are not up for sale, because it’s pretty much certain that they are -- the printer line being the first one to spring to mind, and even the PC line if anyone wants this kind of business any more.
So as of today, with an elevated share price, rumors that HP is about to dump Autonomy are only that, rumors -- and everything taken into account, probably very tenuous rumors.