back to article HPE crams unloved software down Brits' throats – then charges them $9bn to swallow it

Hewlett Packard Enterprise will eject its non-core software business in what it calls an $8.8bn "spin merge" deal with UK-based Micro Focus. HPE's big data, security, and IT management products – including some of its ex-Autonomy assets – will be spun out into a new company that will merge with Micro Focus. That's a software …

  1. Fatman

    HP's """machinations"""

    All I can say is: Thank $DEITY I never owned any HP stock.

    1. Anonymous Coward
      Anonymous Coward

      Re: HP's """machinations"""

      you may not have avoided owning any HP Stock/shares but what about your pension and investment companies?

      Are you 100000% certain that you have never owned any HP/HPE stock even indirectly?

      Posting AC simply because I'm an ex employee and have my pension to consider.

      I don't like the new HP/HPE one little bit. It is a mere shell of what it once was and the only people to benefit are the senior managers who seem to get richer and richer the more they sell off. Strange way to run a business for the long term but long term (> 3 months) does not satisfy Wall St who want it all NOW.

      1. Zed Zee

        Re: HP's """machinations"""

        Let's hope his pension fund manager invested in MF stock instead - it's up 21% today! My wife invested in them about 6 months ago - it's made over £1000 overnight!!

        1. fajensen
          Coat

          Re: HP's """machinations"""

          Let's hope his pension fund manager invested in MF

          Good of your wife, however, you *know* that your pension manager runs his private portfolio along with yours so, while He bought HP and "You" bought MF the records now clearly says the opposite! Sucks to be retired you, doesn't it.

          - How else could it be that the stock market rallies 30% in two years and yet, my pension funds barely make expenses and fees? Across a wide diversity of fund managers. Which are ALL dum-dums!? Too much of a coincidink I Think.

        2. carrera4life

          Re: HP's """machinations"""

          So you've sold them?

    2. Zed Zee

      Re: HP's """machinations"""

      Yeah, but I bet you regret not buying MF shares; they're up 21% this morning, according to the FT!

      1. Jove Bronze badge

        Re: HP's """machinations"""

        Well now that HPE has a half-bite it wont be long before MicroFocus is wiped out.

    3. Zed Zee

      Re: HP's """machinations"""

      But you should've bought yourself some MF stock.

  2. Anonymous Coward
    Anonymous Coward

    So what exactly is HP keeping from a software perspective?

    No offense to the Brit pride, but Micro Focus seems to be a place where software goes to (profitably) die. Similar to CA. They buy a bunch of software brands that are not growing, often declining, but they still have a large install base. They then do nothing as far as future development and charge people a mint in support. The brands continue to decline, but when you are raking in $100s of millions to billions for a few patches every now and again, that is crazy profitable... and you can make a positive ROI running a software company into the ground. It's a perfect scam because although people realize they are being ripped off and slowly pull the, lets say CA, software out of their environment, CA can just take the millions they have made on the software you just pulled out and buy another software company. Repeat process. There are many people who sincerely claim they will never work with CA again, but they don't really have a choice when CA up and buys some other ISV they have installed.

    1. Hans 1
      Boffin

      >There are many people who sincerely claim they will never work with CA again, but they don't really have a choice when CA up and buys some other ISV they have installed.

      Easy solution, go OpenSource or better, free software all the way, none of this crap.

      1. Lance the Boil

        remember Ingres?

        Open source DB software.... bought by CA..... who now sell support.

        Not dissimilar to MySQL/Oracle...

        So opensource isn't the answer you think it is.

        1. Anonymous Coward
          Anonymous Coward

          Or RedHat for that matter (or SuSE, take your pick)

    2. ArthurKinnell
      Linux

      Live long and prosper

      Since Micro focus acquired Novell we have seen new releases of GroupWise, GroupWise Mobility Service, Filr, ZenWorks, iPrint, Open Enterprise Server and more. The road map ahead already shows more release of all these products coming out over the next 3 years at least. So your opinion of MF being the place software goes to die does not ring true I am afraid.

      What MF intends to do with this remains to be seen, but I am sure the subject of this latest acquisition will be raised at the next MF UK summit in London next week.

      Tux because we all love Linux right?

      1. Anonymous Coward
        Anonymous Coward

        Re: Live long and prosper

        When I wrote that new development would be killed off, that was hyperbolic. Companies like CA and MF don't literally stop all new development.... They have to play the game a bit. Keep customers suspension of disbelief going with some modest additions and elaborate roadmaps. They will certainly not be pouring money into these products to create the next gen solution though (the way Salesforce, Workday, Google Apps, etc are just pouring money into development to take over their categories and win new customers).... It's all an equation for the CAs of the world. If they can keep a larger share of customers paying support for a longer period of time by releasing a few new things, they'll do it. They never intend for this software to be a market leader or expect it to gain a large share of new customers. That's where I was going. They just intend for it to hold on as long as possible while the support pours in.

        On the point of there being nothing wrong with continuing to run tried and true software, that's fair. The point though is that it should not still cost companies millions a year to run 20-30 year old software which the ISVs are not really supporting in any substantial way (90% of the support fees you pay go straight into their pocket to buy some other company).

    3. Zed Zee

      "(profitably) die"

      There's more to software than just selling new licenses; many organisations rely on software that 'just works'. Although MF develops this software as well, it also makes revenue from renewing its license, while companies take the 'if it's not broken, don't fix it' attitude.

    4. Doctor Syntax Silver badge

      "They then do nothing as far as future development and charge people a mint in support."

      It's not necessarily bad, of course. If, say, MS had gone this route with W7, there'd have been continuing licensing income, no W8, no W10. Continued development of mature software is apt to add misfeatures as much as features. And doing it right requires expensive facilities such as QA departments.

      1. fajensen
        Linux

        Continued development of mature software

        Sure, IMO, Microsoft should have continued the development of Win7 in the sense of removing stuff that are long dead, waterlogged and beginning to bloat up, and not adding any new stuff.

        I´d have paid for that too. Instead they seem to have dragged it all over to Win10, added more bloat, and an NSA/Adware Interface to boot - Just to put the icing on the suspiciously brown cake.

        So, now I won´t pay. Wifeys next lapdog is a Mac and mine a quite cheap used core i5 Lenovo X-series from back before the Chinese really crapified the design, with Linux on it.

  3. John Smith 19 Gold badge
    WTF?

    MicroFocus an "IT COnsultancy"

    I think you'll find they supply the Compilers for a lot of IBM mainframes and their mini range as well.

    No, the nearest equivalent to CA in the UK is CA.

    Your view on the deal will depend on how you see it.

    Either they got $10Bn of assets for just over a quarter of that or they paid close to 3x revenue for this software pick-n-mix deal.

    Time will tell who's right.

    1. Doctor Syntax Silver badge

      Re: MicroFocus an "IT COnsultancy"

      "Either they got $10Bn of assets for just over a quarter of that or they paid close to 3x revenue for this software pick-n-mix deal."

      Did you notice that HPE now own 50.1% of them. So their shareholders just got a diluted share of the enlarged business. Given that their new majority shareholders are HPE should they feel comfortable with that?

  4. Korev Silver badge
    Unhappy

    The techies doing the work?

    "The merged company is expected to have more than 4,000 salespeople" - no figures on how many people there will actually programme and support the software :(

    1. Anonymous Coward
      Anonymous Coward

      Re: The techies doing the work?

      About 8 in total.

      However, all jobs are routed through a chain of at least 3, usually 5, consultants before hitting one of the 8 capable ones doing the actual work, so, considering queuing, I'd guestimate that in the brochure there will be a healthy-looking 150 IT-consultants available for support and programming.

      So, your needs will be served (Muahahaha!)

      That´s how we do electrical design in Sweden anyways, there is no-one left who can.

  5. ArthurKinnell
    Linux

    Live long and prosper

    Since Micro focus acquired Novell we have seen new releases of GroupWise, GroupWise Mobility Service, Filr, ZenWorks, iPrint, Open Enterprise Server and more. The road map ahead already shows more release of all these products coming out over the next 3 years at least. So your opinion of MF being the place software goes to die does not ring true I am afraid.

    I am sure the subject this latest acquisition will be raised at the next MF UK summit in London next week.

    Tux because we all love Linux right?

  6. Medixstiff

    "However, HPE will have the power to appoint its own executives to serve on the company's board of directors"

    So they want it to die then?

    HP Manglement is why they are in the position they are in.

  7. Chris Miller

    So, MicroFocus will be able to benefit from the geniuses who have so successfully destroyed HP? Sell your MF stock now.

  8. M7S

    El Reg, could we please have an update

    on the current and anticipated situation regarding the various legal actions that were supposed to be going in several directions involving Autonomy (and the ex-directors thereof), HP, various regulators and auditors?

    I'm hoping for some interesting reading soon

    Thank you

  9. HmmmYes

    In short, HPE have flipped their mistakes to MicroFocus and taken a majority stake in the new company.

    All I know about about MicroFocus, from years ago, is it did something with Cobol. I could not comment on how this will pan out.

  10. Anonymous Coward
    Anonymous Coward

    HP hacking itself to bits...

    ... Autonomy/Software, EDS, Palm, TippingPoint, H3C, plus many others. An endless list of slightly tarnished assets and acquisitions that could have shined if HPE's management had understood how to run them and given them a bit of polish.

    They could have been the forerunners in the public cloud market via their Openstack association/investment and the infrastructure hosted in their datacentres as well as the datacentres they inherited from EDS, rivalling Amazon and Microsoft. Their hardware divisions in servers, networks and storage would have been ideal to develop and produce custom cloud hardware to keep their costs down and connectivity/scalability up. Helion could have been a credible answer to AWS and Azure with the right investment and commitment.

    They could have also sewn up the "IoT" market (god that phrase makes me cringe). WebOS or a derivative on every handheld (phone, tablet) they could sell, plus conventional household and business appliances (LG are certainly making a good go of it on TVs, spotted one in a display case in Delhi recently emblazoned with "WebOS" all over it).

    They could have provided the best business ecosystem for devices, tablets, laptops and PCs as a response to the complete collapse in Microsofts OS quality of late (Windows Phone, Windows 8 etc) and RIM's offerings. They could have cornered the BYOD/business devices market.

    And their various other divisions could have lead the way in helping their customers use this brave new world of tools and infrastructure with custom software to boot. An HP that would have been greater than the sum of it's parts and a massive rival to Amazon, Microsoft and Google. All it took is for the management to have some vision and to empower their staff by letting them participate in the direction of the company. They could have been a one-stop shop for all of your IT needs, business or domestic. All they needed was the strength of conviction to allow their teams to develop strategies and products, and to support them all the way.

    Instead, it's been top-down drivel for the last two decades. Ever since Fiorina, HP's management and executives have been chasing short-term gain instead of long-term plan and this is the final result. Cost-cutting has become the goal (delivered through mind-numbing process and red tape), instead of excellence. They've failed to plan or execute properly for any of the major changes to the IT market over the last decade. Being late to the party is forgivable (i.e. Cloud) if you have a strategy to catch up and make good on your mistakes - HP's management have no response. Their only answer to the changing market around it is to hack the company to death in the hope that it somehow shrinks back into relevance. Unfortunately, chopping off your own arms doesn't make you more agile, especially if you couldn't make effective use of those limbs to begin with.

    This is what happens when you appoint a load of accountants and business management specialists to the top of a technology company, and do away with the technologists. The tech guys at the top usually spot the trends and steer the ship towards them or away from them as needed. They understand the value of investing in your company through research, analysis and invention. Instead you have a bunch of financial managers who don't understand the market they operate in or how to steer through it successfully. They only know how to get short-term (financial year) results. Instead of re-investing, researching and developing, they cut these costs as "efficiencies", effectively chopping at their own legs whilst trying to run and that spells disaster. These people view "research, innovation and invention" as pluglines, not meaningful tasks essential to the growth of an IT business. Accountants, bean counters and people with MAs in Business are important to your success, but that's as part of a well-balanced management team, not solely on their own.

    HP could have been an absolute titan in IT for decades to come, a name which still reflects the quality of the products created by it's founders. Instead it will become a byword for irrelevance and mismanagement. They'll go down in history as the company holding all the solutions to the problems, but the inability to implement them. Whitman isn't solely to blame for this mess, but she's currently striking the killing blow.

    1. Anonymous Coward
      Anonymous Coward

      Re: HP hacking itself to bits...

      Did you also notice how Apple's new suspiciously similar app switcher appeared as soon as HP no longer owned WebOS?

      And don't forget that the other half of Autonomy was already sold to OpenText by HP Ink.

  11. Paul IT

    Break out the COBOL books

    000010 identification division.

    000020 program-id. stock-file-set-up.

    000030 author. MicroFocus.

    000040 environment division.

    000050 configuration section.

    000060 source-computer. mds-800.

    000070 object-computer. mds-800.

    000075 special-names. console is crt.

    000080 input-output section.

    000090 file-control.

    Oh it brings back the memories....

  12. jb99

    I don't understand....

    The BBC headline says "UK tech firm swoops on HP software unit in £6.6bn deal"

    But it seems to me that they've "acquired" the software unit but in turn are now controlled by HP who own 51% ... So this is really HP acquires UK tech firm (but makes them pay for it....)

    Totally confused.

    1. Anonymous Coward
      Anonymous Coward

      Re: I don't understand....

      HPE will trouser $2.5 billion in cash and its shareholders will own 50.1 percent of the new company

      So the shares will be spread about like a madman's crap. HPE won't hold a block of shares to control Micro Focus.

  13. luis river

    Good luck

    Micro focus and HPE merger is wonderfull and promising, both need one another, the combination can be successfull depending of the good managerial impulse.

  14. Anonymous Coward
    Unhappy

    Sorry about that, Britain...

    I think HP just gave you a "Pass The Trash" hand of an off-suited deuce/seven.

    1. John Smith 19 Gold badge
      Unhappy

      I think HP just gave you a "Pass The Trash" hand

      As I noted it depends on your PoV.

      Either MF got $10Bn of assets at a 75% discount or they paid close to 3x their revenue for same assets.

      But if the MF share priced did rise 20% the UK stock market reckons it was a good deal.

      What happened to HP's share price when they bough Autonomy for $10Bn?

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