Hewlett-Packard reported decent earnings this week but the most disappointing aspect of the results was the dismal performance of their recently acquired software company Autonomy. Sales were down and they are removing the companies CEO already. This was one of the worst and most value destructive acquisitions that I’ve ever seen because of the ridiculous multiple they paid for the business. I agree that HPQ is best served expanding its software offerings, but they need to be disciplined in how they accomplish this. Paying such a rich multiple for a company that they weren’t prepared to fully integrate when their stock is trading at 5 times earnings makes no sense whatsoever. I’m long HPQ and I think that the stock is too cheap to pass up on but the last several years have been among the darkest in this company’s storied history.
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