Hewlett Packard Enterprise to complete software spin-off

Hewlett Packard Enterprise completed the spin-off of much of its software business early on Friday, closing the door on the disastrous 2011 acquisition of British firm Autonomy and narrowing the company's focus to data center hardware and software.

The enterprise software businesses, which include the widely used ArcSight security platform, have been merged with Micro Focus International, a British software company. HPE was formed when the company once known as Hewlett-Packard split into HPE and HP Inc in November 2015.

The spin-off comes as HPE adjusts to the rapid shift of corporate computing to cloud services offered by the likes of Amazon.com Inc and Microsoft.

HPE aims to cater specifically to customers running services both on their own premises and in the cloud, said Ric Lewis, senior vice president of HPE’s cloud software group, in an interview.

The spin-off marks the end of HP’s unhappy tangle with Autonomy, which it acquired for $11 billion in an aborted effort to transform HP into an enterprise software leader. The ink was barely dry on the much-criticized deal when the company took an $8.8 billion writedown on it.

HP fired CEO Leo Apotheker and later sued Michael Lynch and Sushovan Hussain, once the chief executive and chief financial officers of Autonomy, respectively. The ongoing legal case remains the responsibility of HPE, the company said.

“Autonomy was a distraction - a big one - and HPE can now stop spending its energy on defending its decision and dealing with the aftermath,” said Glenn O’Donnell, a Forrester Research analyst.

The challenge now for HPE will be to quickly build new software for mixed data center environments, said Tom Bittman, an analyst with Gartner.

“They have the hardware, they have the networking, but software is key here, and they have to push hard,” Bittman said.

Chris Hsu, who was previously chief operating officer of HPE, is taking over as CEO of Micro Focus. He intends to focus on growth through acquisitions, Hsu told Reuters.

“A highly fragmented industry of enterprise software creates an environment whereby we will be well positioned to benefit from that industry consolidation,” Hsu said in a July interview.

"Micro Focus used to be primarily a place where software would go to spend its elderly years," Bittman said. "With all this new software, growth should become a major strategy."

(Reporting by Salvador Rodriguez; Editing by Jonathan Weber, Bill Rigby and Andrew Hay)