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Reuters reported that Hewlett-Packard (NYSE:HPQ) recently held unsuccessful talks to acquire software company Tibco Software Inc (NASDAQ:TIBX). While both companies are well known technology brands, they are on opposite ends of the valuation spectrum. Hewlett-Packard is developing a following among value oriented investors because the stock trades with a forward P/E of 7.21 and a price/sales of 0.70. TIbco on the other hand has rich valuations. TIBX trades at a forward P/E of 26.46 and a price/sales of 5.74.

This doesn't surprise us considering we wrote about the technology industry's recent aggressive acquisitions in our article, "Merger Mania: The Hidden Risks in Cheap Blue Chip Technology Stocks." But what we find scary is that Hewlett-Packard is looking for another aggressively priced deal so soon after its $2 billion acquisition of 3Par. To make matters worse, a Tibco acquisition would have been at least 3 times the size of the 3Par acquisition, illustrating that Hewlett-Packard's hunger for pricey acquisitions may actually be growing. This is not an indictment of Tibco, which happens to have a strong niche and interesting growth opportunities in cloud computing, it is merely a question of value.

With Hewlett-Packard looking to increase sales in the software division, a segment that contributes around 3% of sales, the potential destruction to shareholder value is substantial. Shareholders may find some solace that the Tibco deal fell through, but even without a premium, HP continues to show that they are willing spenders of shareholder capital.

There is no doubt about it. HP is a cheap company, but for passive minority investors, this stock could be a risky bet if the management continues their 'growth at any price' philosophy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Hewlett Packard: Beware This Blue Chip Value Stock