HP-EMC Merger Is Off The Table

Hewlett-Packard is no longer in merger discussions with storage giant EMC.

The end of the merger discussions was brought home forcefully Wednesday when HP revealed that it is no longer in possession of "material nonpublic information."

HP said in a press release that it will now resume its share repurchase program.

[Related: 7 Ways HP Plans To Keep Pace With IT Industry Changes ]

HP, Palo Alto, Calif., said it remains committed to its fiscal 2014 and fiscal 2015 capital allocation strategy of returning at least 50 percent of free cash flow to shareholders through dividends and share repurchases and intends to make up for the fiscal 2014 shortfall over the remainder of fiscal 2014 and 2015.

HP did not confirm the merger discussions with EMC, but sources have confirmed that the two companies held merger discussions.

Reuters was the first to report that an HP-EMC deal was off the table. Reuters said that executives from HP and EMC were "still trying to hammer out a deal" as recently as last week, but the talks were derailed because the two companies could not come to terms on the price of the deal.

HP CEO Meg Whitman could address the end of the merger discussions with EMC at The Channel Company's Best of Breed Conference in Orlando, Fla., where she is scheduled to appear this morning.

"It would have created one of the biggest and most powerful IT companies in the world, but we believe HP has the right product portfolio and focus on innovation to lead the market with or without EMC," said Jed Ayres, chief marketing officer for MCPc, the $262 million Cleveland-based national solution provider ranked No. 89 on the CRN Solution Provider 500 list.

Ayres said he is more excited about HP using some of cash to acquire companies that could accelerate its cloud computing enterprise growth ."Other than VMware, it's not like EMC was knocking the ball off the cover," said Ayres. "We are looking forward to HP innovating more in the cloud."

Ayres said HP has a strong position in the cloud market with its HP Helion cloud offering, which has been boosted by its recent acquisition of Eucalyptus, an open-source private startup that's helmed by former MySQL CEO Marten Mickos.

Eucalyptus, which has close ties to Amazon Web Services, sells software for building private clouds that support AWS' application programming interfaces (APIs), which means customers can move workloads back and forth between their data centers and the AWS EC2 public cloud.

Ayres said MCPc's HP enterprise business is growing at a 50 percent clip. "We are investing tons of resources and training, focusing our head count on HP technologies," he said. "We see 2015 as a breakout year for us and HP."

For fiscal 2014, HP reaffirmed its estimate of non-GAAP diluted net earnings per share to be in the range of $3.70 to $3.74 and GAAP diluted net earnings per share to be in the range of $2.60 to $2.64. Fiscal 2014 non-GAAP diluted net earnings estimates exclude after-tax costs of approximately $1.10 per share, related primarily to restructuring charges and amortization of intangible assets.

HP is splitting into two publicly traded Fortune 50 companies: a $57 billion PC and printing business, which will do business as HP Inc., and a $57 billion enterprise computing business that will do business as Hewlett-Packard Enterprise.

PUBLISHED OCT. 15, 2014