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HPE offloads software arm to Micro Focus in US$8.8 billion 'spin-merge'

Katherine Noyes | Sept. 8, 2016
The move will make HPE a far more attractive target for a possible sale, one analyst said.

"'Big' and application software didn't work well for HPE, and I think they have the potential to move much more quickly in the future in areas where they can make a real impact," he said.

HPE's Synergy Composable Infrastructure, for example, is one where HPE "can change the game, not just participate," he said.

The move is very similar to the one HPE pursued recently when it merged its enterprise services business with CSC, noted Charles King, principal analyst with Pund-IT.

"HPE is effectively making itself a smaller company with significantly higher profit margins," King said. "That should and probably will allow HPE to deliver greater returns to its shareholders, something I'm sure they'll appreciate."

The move will also make HPE a far more attractive target for a possible sale, King added. "Whether that's CEO Meg Whitman's eventual goal is anyone's guess, but the Micro Focus deal certainly moves HPE further along that path."

As part of the spin-merge transaction, Micro Focus and HPE also announced plans for a commercial partnership naming SUSE, a Micro Focus subsidiary, as HPE's preferred Linux partner. They will also explore additional collaboration around HPE's Helion OpenStack and Stackato platform-as-a-service products.

Also on Wednesday, HPE announced financial results for its third quarter of fiscal 2016, including net revenue of $12.2 billion, which was down 6 percent from the prior-year period. Earnings per share, however, beat previous outlook at 49 cents per share.

Source: PCworld 

 

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