Sharks at HP

Usually large enterprises are not under my radar. Most of time I'm interested in early stage startups, programming ( or should I say brogramming ) and entrepreneurship. All the time the time I try to connect dots between M&A , investors and product, like in case of blog post on YouTube acquisition by Google or connection between Thumblr, Vimeo and Union Square Ventures. Gradually I leaned about capital/power flow in deals, but all this seems like child game compared to enterprise size game that is ongoing in HP.

It all started by HP acquisition of Palm for $1.2b in April of 2010. All of online news ranted that WebOS is future of HP and that Apple finally got competitor. Behind the scene, whole acquisition was actually bailout for Elevation Partners on their $460m investment in Palm. Initially, Elevation Partners initially invested $325m including preferred stocks and liquidation preference. Afterwards, same VC firm, in successive investing rounds, Elevation Partners invested even more. Whole deal structure you can find here. Overall, Elevation Partners got $485m on $460m investment and earning $25m.

Couple of months later in August of 2010, Mark Hurd, HP CEO, steps down after to sex affair with ex softcore porn actress that has been working as his assistant. How in the world she got access to such high position at HP?  Well ... on second thought this scenario can be seen very often, just take a look affair behind main man behind WikiLeaks - Julian Assange .

Successor of Mark Hurd, Leo Apotheker indulged himself into HP adventure on September 2010. Having in mind that Leo's previous position was CEO of SAP, company focused on consulting and support, and fact that Palm acquisition was not Leo's deal - Leo spins off HP's WebOS business. And this is how $1.2b just disappeared from HP.

What happened here? Obviously Mark Hurd has been closely monitored and there has been whole network of associates that have been reporting to board directly. My take on this is that Mark has been mislead into Palm deal and as soon as it has been closed, his services at HP where no longer needed. After advent of Leo Apotheker and one shot chance for WebOS, this division on HP business went into hibernation. 

Maybe, I've made some wrong assumptions here because  do not have enough insights on HP situation. Events that happen in last year and half round HP deserve deeper analysis. Sharks are hungry.

Bojan Babic

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