Three years on and the disastrous $11bn (£6.78bn) Autonomy acquisition still haunts HP.
The deal was so toxic and rancorous that HP and former Autonomy executives are still feuding over who is responsible for the over-priced company. But the deal to buy Eucalyptus may be the crack in the ice that will allow HP fully re-enter the acquisition game.
HP waded back into the acquisition pool yesterday with a reported $100m deal to buy Eucalyptus, a pioneer in open source cloud software. The rationale behind the deal may be simply the price. Eucalyptus's founder, Marten Mickos, had recently changed his tune by embracing OpenStack, and rumours were circulating that the company was running out of cash.
Eucalyptus is an interesting company that provided free and open-source software for building private and hybrid clouds in the Amazon Web Services infrastructure. While it had initial success, the flood of numerous other resources for building on Amazon and other cloud providers has raised the level of competition. In fact, HP has its own Helion offering for building in cloud environments.
In the grand scheme of things, and regardless of the health of the assets, Eucalyptus is a side show. Even at a $100m price tag, the company and its offerings aren't very interesting or have a real ability to move the needle in HP's overall cloud business.
Reports have surfaced that EMC is considering selling VMware to HP, a deal which would have a far greater impact on the balance sheets and the market. Neither EMC nor HP are commenting on those reports.
By buying Eucalyptus, HP is showing a renewed confidence in the acquisition game. Rumours and speculation that HP may be gearing up for a major acquisition have been circulating for weeks, as analysts note the growing pile of cash in the HP vault and the need to expand various aspects of its technology portfolio.
HP is currently in its best financial health in years. The surprising resurgence in PC sales is providing the company a little cushion as it continues to climb out of the hole it dug itself with several failed acquisitions, product launches and declining investments in research and development.
Under CEO Meg Whitman's turnaround plan, three technology segments have been given priority as the pillars of HP's future: cloud, security and big data. While HP continues to sort out the Autonomy deal as the underpinning of its big data strategy and has invested in cloud resources, security has remained the area that needs the most attention.
Over the last few weeks, the M&A and investment community has maintained a low-level buzz over possible HP acquisition targets in the security market. Many of the potential targets mentioned come with big price tags, including next-generation firewall vendor Palo Alto Networks, threat management software vendor FireEye and unified threat management appliance vendor Fortinet.
Each of the potential security targets would tremendously bolster HP's existing security assets, which are headlined by its intrusion-prevention appliance, security integrity testing applications, security event and information management resources and Proliant firewalls.
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