HP to buy Opsware, Neoware in software push

By Franklin Paul and Philipp Gollner

NEW YORK/SAN FRANCISCO (Reuters) - Hewlett-Packard Co. (HPQ.N) said on Monday it will buy software companies Opsware Inc. OPSW.O for $1.6 billion and Neoware Inc. NWRE.O for $214 million to bolster its business of helping corporate customers manage computer systems.

The acquisitions would bring to about $6.5 billion the amount HP has spent to buy software companies in recent years, including Mercury Interactive Corp. last year for $4.5 billion and Peregrine Systems for $425 million in 2005.

HP, the world's largest personal computer maker, has been expanding in software to supplement its biggest businesses of making computers and servers for consumers and companies.

"It is likely that HP will continue to be acquisitive in its software portfolio," Thomas Hogan, senior vice president of HP software, told Reuters in an interview.

"There are other parts of the portfolio that are separate from the area of information technology operations and automation ... that we will continue to explore," he said.

HP of Palo Alto, California, said it would offer $14.25 for each share of Opsware, which sells software to automate computer data centers. The offer is 38.6 percent more than Opsware's closing price of $10.28 on Nasdaq on Friday.

Shares of Opsware, begun in 1999 by Web browser pioneer Marc Andreessen after he co-founded Netscape Communications Corp., surged nearly 37 percent to $14.01.

HP's offer for Neoware is $16.25 a share, or 6.6 percent higher than its Friday close of $15.24. Neoware stock rose 3.8 percent at $15.81.

While Opsware and Neoware focus on different aspects of corporate computer systems, their products are used in a broader trend toward centralizing networks, reducing complexity, cutting costs and energy consumption, and improving security, said George Hamilton, research director for enterprise infrastructure at Yankee Group in Boston.

"Enterprises are trying to consolidate more of their computing structure into larger central data centers," Hamilton said. "You centralize in more data centers and use the network to manage applications."

The acquisitions help HP compete with International Business Machines Corp., (IBM.N), which has bought about $5 billion worth of software companies in the past year, helping fuel its second-quarter revenue growth of 8.6 percent. HP last year displaced IBM as the world's largest technology company by revenue.

NEOWARE

Neoware, based in King of Prussia, Pennsylvania, specializes in technology that allows companies to create computer systems that are an easy-to-manage, low-cost alternative to personal computer networks.

Such simplified computers are often provided to call centers, retailers and office workers who do not need full access to PCs. Neoware said its technology reduces security threats and energy consumption.

Its purchase expands HP's foothold in the fast-growing business of virtualization, which lets large computers run several operating systems simultaneously, making it easier and cheaper to run networks.