Monday, August 30, 2010
HP, 3PAR, and Finding a new CEO
We have all watched with some fascination as HP and Dell fight it out in an all-out bidding war for 3PAR, the young data storage company. Many writers, including this article from the CNN Money website, have speculated as to whether the winner of this bidding war will ever be able to earn an attractive return on investment, given the high price premium being offered. However, I find another aspect of this bidding war perhaps even more intriguing. HP does not have a successor to Mark Hurd at this point (Cathie Lesjak is serving as interim CEO). If HP wins the bidding war, how will that outcome affect the search for a new permanent CEO? Will potential candidates be at all reluctant to take the job, given that they will be on the hook for making this very pricey acquisition pay off? I think that issue will be an interesting one to watch in the coming months, if HP ends up acquiring 3PAR. Of course, the 3PAR deal does not represent a large fraction of the market value of HP, but still, this highly visible deal will attract attention. If HP pays a very high premium for the firm, investors will be watching to see if the deal pays off. A new CEO may also have questions about the integration process. What promises will be made, if any, to the 3PAR managers and employees as the deal is made? Will the potential new CEO be willing to live with any commitments made prior to their arrival? To me, these questions will be fascinating ones to consider in the days and months ahead.
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On the other hand, could HP be signaling a desire to evolve? This could be attractive to the right leader. Maybe even if the cost seems high from an ROI perspective.
This transaction raises some interesting questions about decision making and politics within HP. Who owns this transaction and what are the motives? Todd Bradley, not one to take prisoners, has spent the better portion of his career, first at Gateway and now at HP, engaged in mortal combat with Dell.
On the other hand, if this is a Cloud Computing play, does that mean that it is Ann Livermore's deal? So does the fact that the board is moving forward with this without a CEO indicate strength for Ann, or for Todd?
All of which begs the question of whether the board is thinking rationally or emotionally at the current price.
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