A TippingPoint Sale Would Be HP’s 2nd Spin-Off from 3Com
A Look into HP's Strategy and Intended Sell-Offs to Drive Growth
HP’s sale of TippingPoint would be its 2nd divestiture from the 3Com after H3C
In the prior part of this series, we discussed strong rumors about Hewlett-Packard’s (HPQ) inclination to sell its network security business, TippingPoint.
If HP finally chooses to sell off its TippingPoint division, it would be HP’s second spin-off from 3Com. H3C was the first unit to be divested by HP in mid-2015.
In May 2015, HP sold 51%, or controlling interest, in its new data networking operations business, H3C, to Unisplendour, a China-based (FXI) Tsinghua Holdings subsidiary. Unisplendour bought a 51% share in HP’s H3C for approximately $2.3 billion, valuing the entire H3C at $4.5 billion.
In 2003, H3C was formed as a joint venture between Huawei Technologies and 3Com. In 2006, 3Com bought out Huawei’s share in H3C for $882 million. H3C came under HP’s umbrella when HP purchased 3Com in 2010 for approximately $3 billion.
Please read Why HP Sold Its 51% Stake in H3C Technologies This Month to know more details.
Palo Alto is the fastest-growing player in the security appliance space
The above chart shows the market share and year-over-year growth of leading players in the security appliance market, as reported by IDC (International Data Corporation). Cisco (CSCO) leads the security appliance market with a 16.6% share of worldwide revenue in 4Q14.
The top five players in this space are Cisco, CheckPoint, Fortinet (FTNT), Palo Alto Networks, and Intel’s McAfee (INTC). Palo Alto Networks (PANW) has experienced the fastest year-over-year revenue growth since it entered the top five in the second half of 2013. It reported year-over-year revenue growth of 53.3% and held a 7.6% share of worldwide revenues in 4Q14.
If you’re bullish about HP, you might consider investing in the Technology Select Sector SPDR ETF (XLK), which invests about 1.25% of its holdings in HP.
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