HPE Slices ‘Non-Core’ Software Assets And Offloads To Micro Focus For £6.6 Billion

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HPE enters a second wave of efficiency measures, honing focus on the cloud

Hewlett Packard Enterprise (HPE) is cutting its business once again by spinning-off and merging parts of its software division with UK company Micro Focus in a £6.6 billion deal.

HPE’s chief executive Meg Whitman said the company is shedding it non-core software assets, which includes big data, enterprise security and IT operations management segments, to Micro Focus. And the company will instead direct its efforts on building out it software-defined and cloud offerings, such as OneView and the Helion Cloud platform.

“I am confident that we are making the right choices. Once the ES–CSC and Software–Micro Focus transactions are complete, HPE will be a faster-growing, higher-margin and stronger free cash flow company, well positioned for the future,” said Whitman.

Secondary split

HP splitIt is still early days since HPE was formed by splitting HP into two divisions, one focused on enterprise technology and the other, HP Inc, predominately on hardware.

So for HPE to divest more of its assets is noteworthy, but at the same time the company has seen a drop in revenue contributed by holding on to these ‘non-core’ software assets.

The initial split of HP was a means to streamline the business, so further streamlining to focus on there areas where HPE sees growth would seem like a sound strategy.

“As I’ve said many times before, we’re living in a world where continuous improvement is essential to long-term success,” noted Whitman.

A lot of the assets HPE is selling were gained from its deal in 2011 to acquire British software firm Autonomy, which turned sour for HPE, or HP at the time, and contributed in it writing off $8.8 billion. Selling these assets to Micro Focus signals an end to HPE’s Autonomy saga.

For Micro Focus, gaining some of HPE’s software assets will cost it billion of pounds but once the deal is completed it is forecasted to have annual revenues of $4.5 billion dollars and will become a significantly enlarged company according to Kevin Loosemore, executive chairman at Micro Focus.

“The merger will create one of the world’s largest infrastructure software companies with leading positions across a number of key products. It represents a compelling opportunity to create significant value for both companies’ shareholders,” he said.

Splitting and selling assets seems to be in vogue at the moment, with Intel divesting its Security division into a separate company under the reinvigorated McAfee brand.

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