http://online.wsj.com/article/SB10001424053111904279004576524911286768264.html?mod=WSJ_Tech_LEADTop

I like the word “transformation”. It has an almost ethereal sound to it. It is also less scary than the words “restructuring” and “turnaround”.

Fear and emotion have always governed the stock market. Forget about logic. We need to look at what Leo Apotheker is doing from a logical perspective.

H-P is facing a dwindling computer business. Margins in the computer business are dropping rapidily. H-P never had a chance in the smartphone business because of two reasons – it got to the party late and the company had no relationships with the big wireless carriers.

Leo Apotheker had no choice but to move the company Into a business that is growing and is still in its infancy. I am not sure I would have spent $10.25 Billion on a software company that has than $1 Billion in annual revenue. That is quite a multiple. However, corporate valuations are dependent on three components: revenue, op ex, and perception.

Revenue is the usual metric many analysts use. Op ex is a close second to revenue. The metric hardly anyone ever uses is: perception. Actually a better term would be strategic value.

Strategic value is nearly impossible to place a monetary value on. Assets have a strategic value when that asset is critical to a company’s restructuring, turnaround, or transformation. So “how much was Autonomy worth to H-P’s transformation plans?"

Three cheers to Autonomy’s bankers; it found a company that wanted you real bad.

Three cheers to H-P; it had no choice but at least it found a company that realized it was not big enough to take on the likes of IBM and Oracle.

I am not making light of what H-P’s shareholders are thinking. Hearing news like this from H-P is unsettling. However, I truly believe that H-P had no alternatives.

Will H-P have a enough cash for other strategic acquisitions? I think so. Information analytics is nearly a total cash business.