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August: Anything but quiet

Despite the summer heat and family vacations that usually mark the month of August, this year, August has been anything but quiet. More economic crises in both Europe and the U.S. (the public debt crisis only adding to the problems), have forced more government involvement (bringing some leaders out of their usual August vacations), while in the hi-tech world, companies are busy acquiring one another and spinning off: Google purchasing Motorola Mobility and HP acquiring Autonomy, abandoning webOS and announcing the spin-off of its PC division.

While risky, Google’s acquisition has the potential to be successful (and even if it’s not, Google has broad shoulders), but the purchase of Autonomy by HP seems to be more risky, not only for the price, but the method of payment (spending 80% of existing cash at a time when liquidity is more valuable than gold). To get positive ROI from a $10B deal seems more like a leap of faith.

The Autonomy of today is very different than the Autonomy of a few years ago. Today, it is a conglomerate of diverse companies, acquired over time, where enterprise search revenue represents only a portion of total sales (less than half if you read the P&L closely). In practice, HP is entering into new territory—the software business—where it will be selling a complex product in a field filled with aggressive competitors (This article from The Register does a good job of explaining the challenges here).  I’m curious to see how it all shakes out.

By this time next year, we’ll have a better understanding of who was right, and hopefully, also more peace in the world and stability in world markets. But for now, even as we can see that the year is almost gone, we’ll continue to work hard to a strong finish for 2011 amidst this ever changing world.


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