Spend, spend, spend. Acquisitions will form part of HPE’s strategy going forward confirms CEO
Spending on acquisitions at HPE are not going to stop anytime soon, after CEO Meg Whitman confirmed more purchases may be on the cards.
HPE has already spend more than £750 million on acquisitions so far this year as it seeks to arm itself with the server and storage tools needed to take on the growing challenge posed by Amazon and Dell among others.
Whitman’s’ acquisition statement came after HPE disappointed Wall Street with its projected earnings going forward.
“I think you will see acquisitions become a bigger part of our strategy,” Whitman was quoted as saying by Bloomberg at HPE Discover in Las Vegas.
Whitman also outlined three main ways to assist HPE going forward.
The first is acquisitions, but the second is innovation in HPE’s main product lines, such as improvement in servers, storage and networking.
The third area pinpointed by Whitman is the firm’s Pathfinder program, which invests in younger firms. Whitman reportedly said this program was a great way to get innovation without taking a financial hit.
“There are a number of companies that I think would be quite interesting to buy,” she is quoted as saying. “The problem is they have $20 million of revenue and they lose $150 million.”
Whitman of course has been in charge of HPE for a number of years now and she was responsible for the shedding of some of its non-core assets, such as the PC and printer business (now at HP Inc) and some of its software units.
This strategy of offloading assets means it is now more clear where the company’s resources should be spent, she reportedly said.
“Back when we were an enormous company with six or seven operating divisions, there were a lot of mouths to feed,” Whitman said. “Printing wanted to make acquisitions. PCs wanted to make acquisitions. Software wanted to make acquisitions. Now, we have a much more focused strategy.”
Hit And Miss
HPE has a mixed record when it comes to acquisitions. In April it purchased Nimble Storage for $1bn (£794m), allowing it to boost its hybrid IT services with flash storage.
It has also purchased Simplivity ($650m) to help its storage line; Niara, a security startup earlier this year; and metering and billing specialist Cloud Crusier. Last year it acquired SGI for $275m (£212m) and other major purchases include Aruba for £1.95 billion in March 2015.
But HP has had mixed success with its acquisition strategy in years gone by. Its $11.1 billion (£7.3bn) purchase of Autonomy in 2011 was a disaster, and it forced the firm to take a humiliating $8.8 billion (£5.8bn) write-down, with Autonomy execs being blamed for creating inflated financials and accounting fraud.
HP’s acquisition of Palm for $1.2 billion (£816 million) in 2010 was also not one of its best deals.
But that has not put off Whitman. She said this week that HPE would stick to its core business that includes servers, storage and networking.