Coming to terms with what happened at Hewlett Packard last week would try the patience of anyone trying to be Alice-like and believe three impossible things before breakfast.
Certainly the plummeting share price suggests that shareholders and Wall Street are having difficulties coming to terms with the out-of-the-blue decision to get out of the PC business - including that so-called iPad killer that had scarcely hit the shelves before being scrapped.
Software and services are where it's at and where it's going to be at, according to CEO Leo Apotheker, a self-confessed out and proud software man. And that means a lot of Cloud of course. He explained:
Apotheker also confirmed HP is to acquire the UK firm, Autonomy for £7.1bn - a massive mark-up on its stock value which seems to be causing considerable unrest among the HP shareholders. The Cambridge-based company is a specialist in unstructured data analytics, which HP claimed will enable it to “reinvent the business analytics software and services space" as well as bolster its Cloud Computing offerings in both information management and data analytics.
CEO Apotheker commented:
For its most recent quarter, HP Services delivered revenue of $9.1 billion, up 4% from the prior year quarter, but down 2% in constant currency. IT Outsourcing revenue of $3.9 billion was up 5% year-over-year, helped by interest in Enterprise Cloud services. Apotheker concluded:
Others inevitably are less convinced. Anthony Miller of research firm TechMarketView commented:
Other commentators made unfavourable comparisons between the performance of HP and Cloud Computing firms such as Salesforce.com. On his MSNBC show Mad Money, market commentator Jim Cramer dubbed Autonomy "a second rate Salesforce.com" and questioned HP's strategy and the attention the firm gets from Wall Street:
Cramer concluded that the best hope for HP was what he euphemistically called "some house cleaning" or that the firm ends up being sold.
That latter option was the talk of Silicon Valley this week with mounting speculation that Oracle would finally settle old scores with HP (and Oracle CEO Larry Ellison with Apotheker and HP chairman Ray Lane, Ellison's former number 2 at Oracle) by taking advantage of the collapsing share price and making a hostile takeover bid.
Such a bid would require Oracle to bed in for a long battle in the PeopleSoft takeover mode rather than the smooth acquisitions of late. Apotheker and Lane would fight any approaches from Oracle while the likes of IBM and Dell would most likely refer any bid to the regulators on the basis of monopolistic concerns.
But if such a bid took place and succeeded, it would shore up Oracle's hardware ambitions and give Oracle yet another tall metal box with a cross on the front to call a Cloud as well as returning ousted HP CEO Mark Hurd to his former home.
It's almost too perfectly ironic a scenario not to be entertained, even if the practical realities of pulling it off would be hugely expensive (prohibitively so, even for Oracle?) and fraught with difficulties. In the meantime, let's just imagine Ellison smiling quietly to himself as he watches Wall Street speculate about his intentions while his latest arch-enemy flounders to restore balance.
As for HP's Cloud intentions, all eyes will now be on the VMworld conference next week where the firm is expected to go into more detail about its plans for its Amazon-like public Cloud services. HP may well find it gets a lot more attention next week than it might have expected when it signed up as a sponsor of the event...
