I just got a mysterious one-line BlackBerry message from a well-placed tech-industry figure. It was a single, terse question in the subject line, no body: "Do you think HP will make a play for Symantec? ... I do."
I'm pretty sure the message wasn't meant for me, but for some other Dave in this guy's address book, because when I emailed back, there was no response. But it got me thinking. Is HP about to take out Symantec? Is it so obvious that I'm the only one who doesn't know? Would it even make sense?
First off, let's look at the facts. HP is now the world's largest technology company by revenue, having just passed IBM ($94bn in trailing annual revenue versus $91bn for IBM). HP chief executive Mark Hurd has doubled the stock price in the past two years by cutting costs and restoring morale, but he now needs more high-margin growth engines - such as software - to impress Wall Street and keep the party going.
Symantec, on the other hand, has been stuck in neutral for the past two years, dragged down by one big acquisition (Veritas) widely perceived as a mismatch. And it's facing serious competitive threats from Microsoft, EMC's VMware, Cisco, and other power hitters.
Meantime, big tech deals have started to pop like popcorn in the past couple of weeks, with Oracle acquiring Hyperion for $3.3bn and Cisco gobbling up WebEx for $3.2bn. Why the flurry of deals? The broader stock market's taken a hit, and investors are nervous about slowing growth, which is a good time for midsize companies to cash out and find the safe haven of a battleship with enough momentum to weather an economic storm.
Also, Wall Street bankers may have taken a hit on some of those subprime loan syndications, so a few more big tech deals could really help keep their profits flowing (bankers fees on a $15bn-plus HP/Symantec deal could easily run in the tens of millions of dollars). But enough cynicism - what about the substantive merits of an HP/Symantec hookup?
For starters, HP could make handy use of both halves of Symantec, integrating the Veritas products with its HP OpenView and storage businesses, and the client security products - Norton AntiVirus, for example - with its PC business. In the datacentre, HP could use Veritas as a nice counterweight to EMC, which recently nabbed RSA to bulk up its software franchise (led by VMware).
On the PC/client side, where HP will soon face a rejuvenated, regime-changed Dell, it might not hurt to try selling products that are secure out of the box, rather than just for the first 60 days or whatever. How's that for a concept?
Finally, a couple of big infrastructure software acquisitions such as Symantec and/or BEA Systems might give HP the cover - or courage - to spin off its cash-cow printer division, which would make Wall Street very, very happy and probably boost HP's stock price even further.
Do I think this Norton-Packard deal will get done? Yes. Would I bet on it happening this year? Unclear. There are few companies big enough to digest Symantec whole (HP, IBM, and Oracle come to mind), and time is on their side - they can wait for competition or the economy to turn up the heat on Symantec and potentially push down the price. But hey, maybe my mystery BlackBerry alert pal knows something I don't. Norton-Packard, anyone?