Hewlett Packard's Market Value Plummets, Oracle in for the Kill?

Paul Lilly

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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