HP Enterprise Software Sale A Guessing Game

Hewlett Packard Enterprise (HPE) is looking to separate out its software unit, reports late last week said.

Reports by The Wall Street Journal, and circulated by other outlets, said HPE is seeking between $8 billion and $10 billion to sell its software unit, leaving HPE to focus on its cloud storage services, networking, servers, business-critical systems and technology systems, reports added.

An unnamed source told reporters that the company is looking to divest the software unit, while previous reports had already said the firm was speaking with private equity firms as part of the effort.

Moor Insights & Strategy President and Principal Analyst Patrick Moorhead, however, declared that a deal is “possible but not probable.”

“Companies are always evaluating their options, even if it’s to gauge the value of a business whose value isn’t indicative in the public stock price,” he said in an emailed statement to Computerworld.

But divesting its software unit could help the company that has endured a massive shakeup in the last year, as well as a troublesome takeover of U.K. software firm Autonomy in 2011. Soon after, Hewlett Packard, which had not yet broken up, alleged that Autonomy had accounting improprieties before the acquisition, though former management of the company denied the claims.

Last year, HP split into two pieces — one being HP Enterprise and the other being its consumer-facing services unit. Just before, reports confirmed that its enterprise-facing unit had laid off some employees following a subcontracting deal with Ciber, raising some concerns that the soon-to-be-independent HP Enterprise would be born already struggling to cut costs and beat mediocre sales reports.

Other analysts, however, declared HP Enterprise to be the company’s most stable and successful operation due to weak performances at its consumer-facing unit.

According to reports, HPE’s software division posted $3.6 billion in revenue last year, an 8 percent decline from the year before, as the firm’s customers transitioned to Software-as-a-Service subscription models.