Zacks.com releases the latest Analyst Interview. Today’s interview is with senior analyst Steve Biggs, who discusses Hewlett-Packard (NYSE: HPQ), Opsware (Nasdaq: OPSW), IBM (NYSE: IBM) and Computer Associates (NYSE: CA).
A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.
Earlier this week, Hewlett-Packard announced it was buying out one of you small-cap companies, Opsware. What do you make of this?
Well, it makes sense. It’s a perfect fit for Hewlett-Packard (NYSE: HPQ). Opsware (Nasdaq: OPSW) is in the emerging space of data center automation. I think this is an important area, as data centers become more complex, and it fits in with what Hewlett-Packard does as far as managing their servers that go into the data center.
They’ve been in this a little bit with their OpenView software, and actually tried to compete head-to-head with Opsware, but Opsware has a much stronger product offering. I see this as a good fit as far as complementing what Hewlett-Packard already has on the software side, as well as making them a stronger competitor against companies like IBM (NYSE: IBM) on the similar hardware/software space, and then also some similar software companies that are in the business, such as Computer Associates (NYSE: CA).
So for HP, this is a very good deal. You previously had a Buy rating on Opsware, but you’ve downgraded on the news. You’re not expecting a better deal, I take it?
No, probably not, at this point. Although it would make sense for someone like an IBM or even a CA to get involved, I think both HP and Opsware like this deal. Marc Andreessen, founder of Netscape, has a pretty good-sized chunk of these holdings – I believe about 19%. Also, CEO [Ben] Horowitz of Opsware actually once worked for Hewlett-Packard. So I think he’s going to continue on with the company and kind of run the division at Hewlett.
So I think this is a pretty good match. I think for someone else to come in, it would have to be at quite a bit higher than what the current price is, which is $14.25 in all cash. With the stock trading at $14, that’s why I chose to downgrade it and adjust the price target to $14.25.
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