HP, Xerox Aren't That Big
Neither HP nor Xerox can say they've performed strongly recently, but a combination of the two could make sense in targeting corporate America, Russell Holly, senior editor of Android Central, told Yahoo Finance in an interview.
HP continues to see itself as a competitor at the retail level — with products such as ink and printers — but there isn't much upside to this side of the business, he said.
Xerox could be interested in HP's hardware business, which is a "pretty solid" supplier of hardware to enterprises for cloud technologies, Holly said.
A merger between the two remains a possibility, as HP's rejection was based on the price tag of the deal, he said.
Both Companies Up For Sale
Xerox's initial offer looked "crazy on paper" because it is much smaller in size compared to HP, Wall Street Journal reporter Dan Gallagher said on CNBC's "Squawk Box" Monday.
HP's rejection letter gives the impression that the two companies have already talked before, he said.
HP acknowledged during a presentation in October that printing is not a growing business today, nor will it be in 10 years from now, the WSJ reporter said.
The logic in combining with Xerox is not related to growth, but rather to consolidate to better take on larger rivals like Canon, he said.
HP shares were down 1.6% at $19.86 at the time of publication, while Xerox shares were trading 0.77% higher at $39.24.