CEO's big buy forces HP to spend double on cloud catch-up

HEWLETT-PACKARD, which paid the highest multiple on record for a computer company six months ago, now needs to spend as much as double the historical valuation for software takeovers to catch up in cloud computing.

The median 18 times for software

That compares with the median 18 times for software and internet acquisitions in the past five years, according to data compiled by Bloomberg.

The former SAP chief executive inherited a company that trades at the lowest valuation relative to revenues among the largest US innovation companies and faces slowing sales growth over the then and there two years. During Mr Apotheker said this month he would follow a "disciplined" approach to acquisitions for Hewlett-Packard, he may be forced to pay up to offset cuts in development spending by ousted chief executive Mark Hurd and close the gap with Oracle and IBM in cloud computing, which lets users consume software and data over the internet.

After retreating 20 per cent in the past year for the third-steepest drop in the Dow Jones Industrial Average, Hewlett-Packard is trading at 9.8 times profit, the cheapest among US research companies with market values greater than $US20bn, data compiled by Bloomberg shows.

Sales growth is projected to slow to 4 per cent this year and then and there, from 10 per cent in the year ended in October, and the company is lagging behind rivals just as IBM and Oracle in supplying the infrastructure for cloud computing. Mr Apotheker intends to build a cloud computing service that will let software developers write, test and run applications securely in its data centres using Hewlett-Packard research.

Seminars, conferences and moreAustralia's premier calendar for IT managers, chief information officers and technologists featuring product launches, innovation clinics and management sessions. Updated each Tuesday.

HEWLETT-PACKARD now needs to spend as much as double the historical valuation for software takeovers to catch up in cloud computing.

3:00PM Lauren Wilson and Ben Packham THE Gillard government has been forced to offer a written commitment to supply future broadband technologies at uniform prices across Australia.