Is Hewlett-Packard Destined for a Private Equity Buyout?
MarketWatch reports that private equity firms have expressed an interest in acquiring some of Hewlett-Packard’s (NYSE:HPQ) business units. PE groups Blackstone Inc. (NYSE:BX), KKR (NYSE:KKR), and TPG Capital, “argued that H-P was stretched too thin and should spin off some units,” sending HP stock higher today, up 2.39% at close. Analyst Brain Marshall of Gleacher and Co. said of the company, “The chatter that large private equity players are purchasing pieces of H-P is making people excited that this could unlock shareholder value.”
Hewlett-Packard’s CEO Leo Apotheker says there is no substance to these rumors, calling buyout talks, “all based on rumor and speculation,” adding, “We are not breaking it up. We see value in the whole thing. Apple (NASDAQ:AAPL) is the benchmark and they have put together software and hardware and consumer and corporate, and that’s what we want to do.”
The company is currently the largest tech business in the world, with a market cap of $72 billion. HP is also the leader in sales of Personal Computers, with that division accounting for 13% of the company’s profits last year. PE related-chatter believes that HP may have spread itself too thin in branching out its corporate divisions, and believes that the company’s centralized management is preventing smaller segments from performing as well as they could.
HP has recently announced plans to further expand its business operations, looking to break into markets in cloud computing and personal data storage. The company will also release a new tablet, the “touchpad” available in stores tomorrow, though the product has already received negative reviews from tech critics.
Competitors to Watch: Dell Inc. (NASDAQ:DELL), Apple Inc. (NASDAQ:AAPL), Oracle Corporation (NASDAQ:ORCL), Microsoft Corporation (NASDAQ:MSFT), Cisco Systems, Inc. (NASDAQ:CSCO), Intl. Business Machines Corp. (NYSE:IBM), EMC Corporation (NYSE:EMC), Super Micro Computer, Inc. (NASDAQ:SMCI), RadiSys Corporation (NASDAQ:RSYS), and Silicon Graphics Intl. Corp (NASDAQ:SGI)
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