Raymond James: Hewlett Packard Likely On The Hunt For Acquisitions

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For the first time in eleven quarters,
Hewlett Packard
(NYSE: H-PQ) reported positive revenue growth when the company reported its third quarter results and a strong free cash flow with a $5 billion net cash position. The question investors are now asking is who might H-P buy and why. Analysts at Raymond James pondered the same question and came up with an answer. In a note to clients on Monday,
Brian Alexander of Raymond James identifies the most likely candidates that H-P may look to acquire. “H-P management has indicated its readiness and willingness to make acquisitions following a three-year hiatus that can only be described as an Autonomy hangover,” Alexander wrote. “Interestingly, H-P did not repurchase as much stock as it intended in the most recent quarter because management was “in possession of material, non-public information”, which we assume relates to a pending acquisition. Alexander speculates that H-P will shop around for a deal size of roughly $3 billion to $5 billion and acquire a company that has a clear path to profitability and does not have an excessive valuation. The top-ten acquisition targets according to Alexander are: 1. Privately held Sumo Logic could help strengthen H-P's ability to compete with Splunk. 2. Privately held Hortonworks is already entered in a partnership with H-P and an acquisition could help H-P participate in “big data” deployments. 3. Palo Alto Networks PANW could provide H-P with an aggressive move into network security and add marketing and distribution “muscle” versus Cisco. Alexander notes that the company's management “would likely not sell.” 4. Fortinet FTNT could also add further marketing and distribution muscle versus Cisco. Alexander notes that the company's CEO has sold multiple companies in the past and may be more open to an acquisition. 5. FireEye FEYE is “hot” in the security category and it's incident response fits well with H-P's Services group. 6. Arista Networks ANET complement's H-P's networking and SDN efforts, however given the company's recent IPO, the company is unlikely to sell. 7. Privately held Cumulus Networks supports H-P's SDN objectives and could leverage H-P's platform further. 8. Privately held Adara Networks also supports H-P's SDN/NFV objectives and the companies worked together in the past. 9. Privately held SimpliVity and its Omnicube deduplication and compression technologies could enhance H-P's converged offering and further leverage its platform. 10. Privately held Actifio provides a “leading edge” secondary storage technology for backup and recovery, archive, develops, DR. An acquisition would give H-P “instant mindshare lead” in the market and better compete against legacy storage vendors.
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Posted In: NewsActifioAdara NetworksArista NetworksBrian AlexanderCiscoCumulus NetworksFireEyefortinethewlett packardHortonworkspalo alto networksSimpliVitySplunkSumo Logic
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