Report: Hewlett-Packard has suitors for Autonomy, EDS divisions

CEO Meg Whitman is said to have no interest in selling, at least for now

A number of parties have expressed interest in buying Hewlett-Packard's Autonomy software business as well as its EDS services arm, according to a Wall Street Journal report published Wednesday.

The report comes in the wake of an alleged accounting scandal at Autonomy, as well as the recent disclosure by HP in a regulatory filing that it would consider divesting parts of its business that "may no longer help us meet our objectives."

Mostly U.S.-based technology companies and their representatives have approached HP in regard to buying Autonomy and EDS, according to the Journal's report. However, HP CEO Meg Whitman is not interested in selling anything just yet, it adds.

Asked about the Journal's story, an HP spokesman said the company wouldn't comment.

Many observers considered the US$10.3 billion price tag Autonomy fetched to be far too high, a view compounded by the alleged accounting improprieties, which HP says occurred prior to the deal.

HP recently announced it would take an $8.8 billion writedown, attributing about $5 billion of that to the alleged accounting issues. Autonomy's founder and former CEO, Mike Lynch, has vehemently denied HP's accusations and maintains it is withholding crucial information.

Autonomy's software focuses on search and data management. Potential suitors could include Dell, which has been making a string of software-related purchases in recent times, and like HP, is otherwise known for its hardware and services. CEO Michael Dell reportedly turned down an opportunity to buy Autonomy before HP acquired it, because the price was too high.

"There are untapped opportunities in enterprise search and text data management, and Autonomy has made little progress under HP's ownership," said analyst Curt Monash of Monash Research. "So Autonomy might be more valuable somewhere else. But any sale would surely be at a huge discount to the acquisition cost."

The range of potential suitors for EDS could be substantial, ranging from fellow large systems integrators such as Deloitte, Accenture and Infosys, as well as software vendors looking to open up a new line of business.

HP last year also took an $8 billion writedown on EDS for "impairment of goodwill" associated with it. In financial circles, "goodwill" refers to intangible assets such as a well-known brand name, which are used to help estimate a company's total value.

"As for EDS, it's sad that a once-great company has fallen so low," Monash said. "The EDS mystique seems wholly gone."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Tags Mergers and acquisitionsbusiness issuesDellservicessoftwareHewlett-PackardaccentureDeloitteedsinfosysAutonomy

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Chris Kanaracus

IDG News Service
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