1. HP's Sunny Day
The sun don't shine on the same dog's ass every day, but it's been a long time since HP (HPQ - Get Report) has seen the ray of light it's getting now -- even if it is being reflected off Michael Dell's money clip.
HP shares climbed over 4% Wednesday following a news report that unnamed purchasers -- stirred perhaps by Dell's (DELL) buyout discussions -- are considering buying some of its units. The WSJ reported this week that the humbled tech giant has received "expressions of interest from potential suitors" for its EDS and Autonomy divisions, but CEO Meg Whitman was uninterested in selling at this point.
For those who may not remember, HP acquired EDS for $13.9 billion in 2008. In August 2012, HP took a charge of $10.8 billion, mostly related to the writedown of the computer-services company.Oh, man, HP's prankster friends on Wall Street really gave them some great valuation advice on that one. Talk about earning your advisory fee. As for Autonomy, well, it's hard to forget what happened there, even though Whitman wishes she could. HP's then-CEO, Leo Apotheker, snapped up the U.K. software maker in August 2011 for $11.1 billion, shelling out a 58% premium to the British company's shares at the time. Last autumn, however, the purchase was thrust into the spotlight when HP recorded a massive writedown of $8.8 billion relating to accounting improprieties at Autonomy prior to the acquisition. Obviously, whichever banker did the due diligence on that schnauzer of a deal clearly wasn't being very diligent. The two sides are currently in litigation, making it even more curious as to why a buyer would want to step into that morass. That said, Silicon Valley CEOs have a habit of doing whatever Wall Street salesmen whisper in their ears. And on that note, we can't wait to see what happens with Dell. Private equity groups are arranging billions in financing as we speak for a buyout of the once-proud PC maker that could top $24 billion. Yee haw! We haven't seen a deal in the Lone Star state this big since the TXU LBO. And we all remember what a Texas-sized turd that turned out to be. Look: Wall Street pocketed massive fees to build up HP and now they want even more to break it up. As a result of all the attention, HP shareholders are finally getting their day. Good for them. As we all know, every dog deserves at least one.
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