You’d never guess that computer and electronics maker Hewlett-Packard was laying off significant portions of its workforce trying to save money and streamline operations: the company has just announced a all-cash $4.5 billion deal to purchase Mercury Interactive. Mercury Interactive develops business management software focussed on payroll, inventory management, and sales tracking, and offers consulting and management services to enterprises. The deal marks HP’s biggest acquisition since the company’s envelopment of rival Compaq Computer in 2002.
“Today, we are combining two market-leading businesses to create the most powerful management software portfolio in the industry,” said Mark Hurd, HP chief executive officer and president. “Together, they will help customers cut their IT costs, speed the delivery of new services and drive profitable growth at HP. We expect this important acquisition to deliver significant value for our shareholders.”
HP goes on to predict that the acquisition of Mercury will spur revenue from HP’s Software operations to more than $2 billion a year, and annual growth between 10 and 15 percent.
In the last few months, the talk about Mercury has not centered on its products or services but on the company’s admission that some of its top executives backdated the sale of stock option awards to increase their personal financial gains. Mercury gave long-standing CEO Amnon Landon and two other executives their walking papers in November 2005 over the scandal. Executives at several other Silicon Valley companies
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