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Analysis: HPE's strategy in selling software business to Micro Focus

September 08, 2016 /

Proving the rumours true, HPE offloaded its software assets to Micro Focus, a merger which followed the similar spinoff of its services business to CSC in May. This trimming of assets by HPE sits in sharp contrast to recent moves made by its competitors – only the day before the Micro Focus merger, Dell completed its $67 billion acquisition of EMC. While HPE is slimming down, its competitors are bulking up; a point which has not escaped Meg Whitman’s attention."We are getting smaller, while Dell is getting bigger, and this is important because I believe speed and agility is important in innovation and go-to-market," the HPE CEO told Wall Street analysts on Wednesday."They are levering up and we are de-levering. We have $5.3 billion of net cash on the operating company and we are going to have a lot more by the time we are done with these [spin-off merger] transactions."Whitman’s mention of cash was a subtle way of putting the spotlight on Dell’s huge debt incurred by the EMC acquisition – but maybe it also deflected attention away from the huge gamble HPE is taking in its trimming down of business.Although HPE can boast that gambles have paid out in the past – the company’s market cap has increased by $10 billion since the split from HP Inc. – its latest flutter raises some serious concerns.