July 23, 2007 5:24 AM PDT

HP opens wallet for software business

Taking a cue from rival IBM, Hewlett-Packard signaled on Monday that it is buying its way into the software business, offering $1.6 billion for Opsware and $214 million for Neoware.

Opsware, co-founded by Web entrepreneur Marc Andreessen, makes software for automating data center administration tasks, such as sending out security patches or installing operating systems for a large number of servers.

HP offered $14.25 per share in cash, a 38 percent premium over the company's share price on Friday. Figuring in Opsware's existing cash and debt, the deal is valued at $1.6 billion.

The company said the acquisition, following the $4.5 billion purchase of Mercury Interactive one year ago, is part of HP's strategy of offering a comprehensive software line for managing corporate data centers.

"The addition of Opsware is expected to enhance HP's standing as one of the world's leading software companies and drive profitable growth for HP," Ann Livermore, executive vice president of HP's Technology Solutions Group, said in a statement.

After the transaction, which is expected to be completed in HP's fourth quarter, Opsware CEO Ben Horowitz will lead HP's Business Technology Optimization organization, reporting to HP Software senior vice president Thomas Hogan.

HP also announced that it intends to buy Neoware in a cash deal. Subtracting Neoware's cash from the offer price, the deal is worth $214 million, according to HP.

Neoware makes thin client and virtualization software for centralizing management of corporate desktop computers. The software will be combined into the business desktop unit of HP's PC business and will boost the company's Linux business, HP said.

The picked-up pace of software acquisitions at HP mirrors a well-worn strategy at rival IBM, which has bought 54 companies since 2003, including 36 software outfits as it decreases its dependency on hardware sales.

Buying outside companies poses both technical and corporate integration challenges. But both companies are trying to create a more comprehensive portfolio to appeal to corporate buyers and to find higher-margin product lines than hardware.

See more CNET content tagged:
Opsware Inc., software business, data center, HP, IBM Corp.

1 comment

Join the conversation!
Add your comment
Fire its own people, buy new firms
Funny. HP fires tens of thousands of its own loyal employees, outsourcing part of that lot to India, and then turns around and spends hundreds of millions to acquire new employees from smaller firms.

Why didn't HP keep its own employees ?
Posted by jfmezei (24 comments )
Reply Link Flag

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot



RSS Feeds

Add headlines from CNET News to your homepage or feedreader.