Hewlett Packard's Market Value Plummets, Oracle in for the Kill?
Hewlett Packard's Market Value Plummets, Oracle in for the Kill?
Posted 08/23/2011 at 8:45am
| by Paul Lilly
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There's a whirlwind of uncertainty surrounding Hewlett Packard right now. Still the largest PC firm in the world, HP's inadvertently drove its market value down by billions of dollars when it opened its mouth last week and didn't stop talking until it announced plans to spin off its PC business, abandon webOS hardware, and spend over $10 billion on an enterprise software firm. Now HP could be ripe for a full takeover.
According to Bloomberg's number crunching, HP's market value went into a downward skid of epic proportions following the flurry of restructuring announcements and is now worth $10 billion less than what it was the moment before it revealed its future direction. That amounts to a 20 percent nosedive, and HP's valuation is now five times its estimated profit, which is 70 percent below the industry average for technology firms, Bloomberg says.
"The value right now looks extremely attractive," Michael Mullaney, vice president of Fiduciary Trust, told Bloomberg during a telephone interview. "For the right company, it probably would make sense for someone to come in and scoop it up. Someone could come and at least buy pieces of the firm."
HP has said it's only interested in selling off its PC division, but that was before it's market value fell like a skydiver without a parachute. One of the rumors out there is that Oracle could end up buying HP. Citing a "source close to the situation," the New York Post says Oracle's Larry Ellison is ready to make a move. It's not unfathomable, especially with former HP CEO Mark Hurd now with Oracle.
Even if HP doesn't sell its entire operations to Oracle, the source believes the OEM could be in for a hostile takeover.
"Perhaps in three years [the Autonomy acquisition] will turn out to be a smart acquisition. But the reality is in nine months HP will likely be defending itself in an Oracle fight," the source said.
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derbed
August 23, 2011 at 9:38pm
Their software is clunky and bloated from printers to servers. They can't compete and be so diversified at the same time. They should get back to thier roots if there are any left, or liquidate. I think liquidation is the best scenario considering the lack of soul in the heirarchy of the company.
publicimage
August 23, 2011 at 8:22pm
HP's Envy line is interesting, but other companies like Asus have more appealing products to me. Maybe someone can swoop in for the buy and transform HP's computer line-up a la IBM/Lenovo?
tnrccola
August 23, 2011 at 4:40pm
Isn't Mark Hurd CEO of Oracle? And wasn't his last job CEO of HP? I think I smell a rat.
JohnP
August 23, 2011 at 4:14pm
I was with HP when Lew Platt announced in-house back in late 90's that the goal of HP was to become the world's largest manufacturer of PCs. Lo and behold it happened but no one knew at the time how cutthroat the business would become. It does HP no good to sell stuff that has such a low profit margin just for the sake of selling stuff (leave that to the Japanese). I thought it was a really bad decision at the time and I applaud the company for getting out.
It is such a crock to use the value of a share of stock to run your business. The absurd but logical conclusion to this would be to sell the entire company off and give all the money to the stockholders. Is that a way to run a company?
Thresher
August 23, 2011 at 3:39pm
The whole fiasco smelled like a panic move.
HP Management is just awful.
livebriand
August 23, 2011 at 9:56am
Getting rid of their PC business AND tablets/smartphones is simply a way to put themselves on a path toward doom.
I Jedi
August 23, 2011 at 9:48am
They should have slowly killed their PC division overtime, rather than slam the brakes on it.
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