By Nico Grant for Bloomberg
HP has said that rival Xerox has started an unsolicited offer for all outstanding shares of HP, escalating a battle for control of the personal computer giant.
Xerox has pitched HP investors on a cash-and-stock offer worth $24 a share. For each HP share, a holder would receive $18.40 in cash and 0.149 Xerox shares. The photocopying pioneer has said combining the companies would yield $2 billion in cost savings and more than $1 billion in additional revenue growth. Both hardware companies have invented technologies still in use by consumers and office workers, and have struggled in a world increasingly driven by software.
HP’s board has rejected Xerox’s offer as undervaluing the Palo Alto, California-based company, and said last week it will return $16 billion to shareholders in an effort to show it can stand on its own. HP executives, however, said they will engage Xerox to discuss a potential combination on their terms.
On Monday, HP said in a statement that it will review Xerox’s offer over 10 business days before advising the best course of action for shareholders.
By David Goldman, CNN Business
Xerox is reportedly considering buying Hewlett-Packard Inc. in what would be a merger of two former American technology giants that have both seen better days.
The offer is thought to be worth $30-billion.
The Xerox (XRX) board discussed the possibility of an HP (HPQ) purchase on Tuesday, according to the Wall Street Journal, which cited sources familiar with the matter. The Journal also reported that the Xerox discussions are preliminary and might not lead to an offer for HP. Xerox declined to comment. An HP spokesperson was not immediately available for comment.
A deal would be complicated by the fact that HP is more than three times the size of Xerox: HP has a market value of $27 billion, compared to Xerox’s $8 billion valuation. But Xerox announced Tuesday that it is selling various stakes in former parts of its business, and it will generate $2.5 billion in cash from those transactions. The Journal also reported that Xerox has been given the blessing by a major bank to receive lending for the transaction, should it go forward.
HP’s stock soared 9% in premarket trading. Xerox was down 3%.
A marriage between the companies could make sense. Both Xerox and HP spun off their big money-making ventures in recent years, leaving behind aging printing businesses that remain profitable. But those earnings are dwindling every year.
HP had surprised investors by growing faster than many had believed possible after its 2015 split with HP Enterprise, but it has struggled in recent quarters.
Although HP still has a sizable PC business, fewer customers are buying ink from HP. Ink sales had long been HP’s profit generator: HP would take losses on its printer sales, generating the bulk of its income from ink. But smartphones make printing less crucial, and many customers who do print are able to find cheaper ink suppliers.
The company announced last month that it would cut between 7,000 and 9,000 jobs by 2022. At the time, Enrique Lores, HP’s new CEO, called the move “bold and decisive action” to help the company in its next chapter. HP’s former CEO, Dion Weisler, stepped down on Friday for a family matter.
Xerox, like HP, relies on a dying business for the bulk of its sales and profit. It sells and services copy machines and printers, primarily for corporations. But sales are falling, declining in each of the past seven quarters.
The deal between two similar businesses could yield cost savings of about $2 billion through layoffs and other synergies, the Wall Street Journal reported.
Both companies have a storied history: Xerox started in 1906 as the Haloid Photographic Co. The photographic supply company in Rochester, New York, paved its way to mega-success in March 1960, when it shipped its first office copier. The Haloid Xerox contraption was the size of two washing machines and weighed 648 pounds. It also occasionally caught on fire. The Xerox copier’s core technology -— a process called xerography, invented by Chester Carlson — is still widely used in copy machines five decades later. Xerox is now based in Norwalk, Connecticut.
HP traces its origins to 1938, when Bill Hewlett and Dave Packard rented a garage in Palo Alto, California. That year, they invented their first product: the HP Model 200A, an audio oscillator used to test sound equipment. The company became the pioneer of Silicon Valley, building its first computer in 1966 and the famous HP-35 in 1972 — the world’s first hand-held scientific calculator.
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Source: Financial Times
Hewlett Packard Enterprise posted upbeat quarterly results and issued a rosier outlook that topped analyst forecasts, sending shares higher.
HPE — the enterprise technology business that split off from HP Inc’s PCs and printers unit — says its fiscal third quarter net revenue climbed 4% from a year ago to $7.76-billion — or a 1% rise when adjusted for currency effects.
That topped analyst forecasts for $7.68-billion, according to a Thomson Reuters survey.
Revenues in hybrid IT — its largest division, which includes computer systems with storage and networking functions — rose 3% from a year ago to $6.2-billion.
In its so-called Intelligent Edge division, which is developing decentralised “Internet of things” technology that allows data to be processed at the point of collection, revenues were up 10% from a year ago to $785m, while financial services revenues rose 3% to $928-million.
Net income rose to $451-million or 29 cents a share in the three months ended in July, up from $165-million or 10 cents a share in the year ago quarter.
Adjusting for one-time items, earnings of 44 cents a share, handily topped forecasts of 37 cents.
“HPE has delivered a strong Q3 and our results prove we have the right strategy to deliver in the areas of highest value for our customers,” says Antonio Neri, chief executive officer.
“Solid execution across each of our business segments, combined with market momentum, will enable us to deliver FY18 revenue and earnings well beyond our original outlook,” he adds.
The company also lifted its full-year earnings outlook again, to a range of $1.85 to $1.90, up from $1.70 to $1.80 previously.
On an adjusted basis, the company now expects to report earnings of between $1.50 to $1.55 a share, up from $1.40 to $1.50 previously. That also exceeded Wall Street’s projections of $1.46.
For the current quarter, HPE forecast adjusted earnings of between 39 to 44 cents a share.
The Palo Alto-based company also says it appointed Tarek Robbiati as its new finance chief effective September 17. Mr Robbiati, who most recently served as finance chief at Sprint, will succeed Tim Stonesifer, who will remain with the company through the end of October.
HPE shares, which are up nearly 17% year-to-date, climbed 1.4% in extended trade to $16.98.
By Dion Weisler for CNBC
HP now expects 4 500 to 5 000 employees to leave the company by the end of fiscal 2019 as part of an ongoing restructuring plan, the PC maker said on Tuesday.
In October 2016, HP’s board had approved a restructuring plan to be implemented through fiscal year 2019, under which it had expected around 4,000 job cuts. In May, the company said it expected that number to increase by 1 to 2 percent.
The company employed 49,000 people as of October 31.
HP, formed in 2015 when the then Hewlett-Packard Co was spilt into two, said in a regulatory filing. It now expects pretax charges of about $700 million related to the layoffs, compared with about $500 million forecast earlier.
HP estimates that about half of the expected pretax costs will relate to severance and the remaining costs due to infrastructure, non-labor actions, and other charges.
When Hewlett-Packard Co split up, HP Inc focused on the consumer-facing hardware business, including sales of PCs and printers, while Hewlett Packard Enterprise co-hosted the company’s data-center, software and services units.
HP, which has the top position in worldwide PC shipments in the first calendar quarter of 2018 with a 22.6 percent market share, reported better-than-expected quarterly sales of $14 billion in the quarter ended April 30.
HP is set to cut between 3 000 and 4 000 jobs worldwide over the next three years, as it seeks to make savings as PC sales continue to plummet.
The world’s second-largest PC supplier has struggled in a dwindling market, and hopes the cutbacks will save the company between $200-million to $300-million annually by 2020.
However, HP will also incur an estimated $350-million to $500-million in restructuring costs.
According to a filing made to the Security and Exchange Commission on Thursday, HP plans to swing the axe between 2017 and 2019, spread across the many countries and regions the company operates in.
HP split into two divisions in September 2015, resulting in a loss of 30 000 jobs – almost 10% of the workforce. Today HP Inc oversees printers and computers while Hewlett Packard Enterprise focuses on enterprise services, though it has spun off much of its software business.
“I’m proud of the progress we have made in our first year as the new HP. Our focus is clear, our execution is solid, and we are positioned well for the next step in our journey,” says Don Weisler, president and CEO of HP, in a statement.
“We are confident in our strategy and believe it will continue to produce reliable returns and cash flow, while also enabling HP to invest in differentiated innovation and long-term growth.”
Weisler acknowledges that the market is currently “challenging”, but says the company is still “committed to innovating”, pointing to HP’s current opportunities in manufacturing and 3D printing.
The announcement comes during a global decline in PC sales, dropping 5,7% in the third quarter compared to last year according to a report by Gartner. This represents the longest period of decline in the history of the PC industry.
By Dale Walker for www.itpro.co.uk
As part of a broad corporate restructuring plan unveiled ahead of the planned spin-off of its Enterprise Services division next March, Hewlett Packard Enterprise announced the retirement of director of Hewlett Packard Labs Martin Fink, effective at year’s end.
Fink, a 30-year veteran at Hewlett Packard, had served in his current role since last November. Previously, Fink, spent three years as the company’s chief technology officer since November, 2012.
In three decades with the tech giant, Fink worked in a variety of roles at Hewlett Packard, including senior vice president and GM of Business Critical Systems and Converged Application Systems.
Fink, 50, has also served as a director with Santa Clara, Calif. based software company Hortonworks, Inc. since July, 2014.
“Martin has had a remarkable career, driving some of our most important initiatives, including our Cloud, open source and Linux strategies and leading the Business Critical Systems division and The Machine,” Hewlett Packard CEO Meg Whitman wrote in a company memo. “Martin will leave a lasting impression on the company, and I know he will be missed.”
Among other changes, Whitman said the company will consolidate its Product Marketing, E-commerce and Consumer Advocacy divisions into a single marketing organization under the leadership of Henry Gomez, the company’s
Chief Marketing and Communications Officer. In addition, Hewlett Packard Enterprise announced that Chris Hsu, the company’s Chief Operating Officer, will now head its IT and Cyber Security teams.
“By having these teams work more closely with Chris, we will further leverage their capabilities across the company to drive process improvement, enhance customer and partner experience and employee engagement,” Whitman adds.
Shares in Hewlett Packard Enterprise were down 5,29% on the back of the announcement.
Lexmark International could be following HP and splitting its business, according to Reuters.
HP CEO Dion Weisler has pointed to a number of factors behind the steep declines in the company’s print revenues in the fourth quarter.
The annual HP Partner Awards was held at Montecasino, Johannesburg on 12 November 2015. The awards aim to recognise and celebrate outstanding partner contributions.