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I'm curious why they choose this method of majority owned spinoffs. What's the rationale behind this financial engineering? Is it that the parts have better mul

I'm curious why they choose this method of majority owned spinoffs. What's the rationale behind this financial engineering? Is it that the parts have better multiples than the parent? That they can claim better optics by consolidating the Earnings Per Share?

bluetwo 10y ago
I think this is a way to consolidate the whole Autonomy mess they started when they overpaid for and tried to integrate the company. It seems HP, IBM, Microsoft, Google, Box, etc. are all trying to build the future of business computing. Good luck with that!
- catmanjan 10y ago
  We're trying to integrate with some of the Autonomy stuff at the moment, talking to HP you realize they know about as much as we do about the products - I assume they got the products, but forgot to hire the developers who created them? Wasn't it over $1 billion for Autonomy?
  - freestockoption 10y ago
    More like $11 billion :)
    - catmanjan 10y ago
      Yeah wow I was an order of magnitude off... I can't wrap my head around how this is good business but I'm sure someone knows what they're doing.
      - jldugger 10y ago
        They ended up writing off 9 billion or so of that purchase.
      - justincormack 10y ago
        It wasn't good business. HP are suing for fraud. However no they did not know what they were doing. Probably still don't.
  - mathattack 10y ago
    I just heard a Podcast from HP and Autonomy's chief customer guy hyping NPS score. I guess they never asked you. :-)
maxerickson 10y ago
Yeah, that the unit is more attractive than the parent is listed in the press release: Accelerates HPE's strategy to unlock faster-growing, higher-margin and stronger free cash flow company. There is also the consolidation and cash payment to consider. All told the spinoff is probably cheaper than trying to buy the competitor.
- mathattack 10y ago
  Very interesting point. In essence this reduces the competitors in the industry, gets them a cash payment, and allows them to consolidate the earnings.
jhatax 10y ago
There is a management concept of the "value maximizing owner". As someone else pointed out, HP under Meg is all about figuring out who can maximize the return on investment into a particular HP business unit. In the cases of the Printer & Computer, IT Services and Enterprise Software businesses, Meg Whitman and HP's board have decided that an external party is better suited (right synergies, right management structure, etc.) to maximize value. Therefore, they are spinning these businesses out to another entity. Keeping a business unit on the books just because it generates cash is no longer considered to be the most optimal way to manage a large portfolio. This, and concepts related to an Advantaged Portfolio, are covered in some detail by the folks at Monitor Deloitte [1]. 1. http://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-cons-building-an-advantaged-portfolio-032315.pdf http://www2.deloitte.com/content/dam/Deloitte/us/Documents/s...

bluetwo 10y ago

I think this is a way to consolidate the whole Autonomy mess they started when they overpaid for and tried to integrate the company. It seems HP, IBM, Microsoft, Google, Box, etc. are all trying to build the future of business computing. Good luck with that!

catmanjan 10y ago
We're trying to integrate with some of the Autonomy stuff at the moment, talking to HP you realize they know about as much as we do about the products - I assume they got the products, but forgot to hire the developers who created them? Wasn't it over $1 billion for Autonomy?
- freestockoption 10y ago
  More like $11 billion :)
  - catmanjan 10y ago
    Yeah wow I was an order of magnitude off... I can't wrap my head around how this is good business but I'm sure someone knows what they're doing.
    - jldugger 10y ago
      They ended up writing off 9 billion or so of that purchase.
    - justincormack 10y ago
      It wasn't good business. HP are suing for fraud. However no they did not know what they were doing. Probably still don't.
- mathattack 10y ago
  I just heard a Podcast from HP and Autonomy's chief customer guy hyping NPS score. I guess they never asked you. :-)

maxerickson 10y ago

Yeah, that the unit is more attractive than the parent is listed in the press release: Accelerates HPE's strategy to unlock faster-growing, higher-margin and stronger free cash flow company. There is also the consolidation and cash payment to consider. All told the spinoff is probably cheaper than trying to buy the competitor.

mathattack 10y ago
Very interesting point. In essence this reduces the competitors in the industry, gets them a cash payment, and allows them to consolidate the earnings.

jhatax 10y ago

There is a management concept of the "value maximizing owner". As someone else pointed out, HP under Meg is all about figuring out who can maximize the return on investment into a particular HP business unit. In the cases of the Printer & Computer, IT Services and Enterprise Software businesses, Meg Whitman and HP's board have decided that an external party is better suited (right synergies, right management structure, etc.) to maximize value. Therefore, they are spinning these businesses out to another entity. Keeping a business unit on the books just because it generates cash is no longer considered to be the most optimal way to manage a large portfolio. This, and concepts related to an Advantaged Portfolio, are covered in some detail by the folks at Monitor Deloitte [1]. 1. http://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-cons-building-an-advantaged-portfolio-032315.pdf http://www2.deloitte.com/content/dam/Deloitte/us/Documents/s...