HP inclines to spin-off option for continued success

Updated: 2011-08-31 10:00

By Liu Baijia and Tuo Yannan (China Daily)

  Comments() Print Mail Large Medium  Small 分享按钮 0


HP inclines to spin-off option for continued success
Todd Bradley, executive vice president, Personal Systems Group, Hewlett-Packard Company.[Photo/China Daily]


HP inclines to spin-off option for continued success
HP's Total Care Center, which opened in Chongqing in May, gives the customer an excellent experience with a full-range of services.[Photo/China Daily]

Hewlett-Packard, the world's largest PC maker by shipment volume, has said it plans to continue expanding "aggressively" in China.

This came in an exclusive interview with China Daily on Tuesday, where an executive said that the Hewlett-Packard (HP) Corp would rather spin-off its PC business than sell it.

This bit of a clarification comes two weeks after its announcement that it would spin-off or sell its Personal Systems Group (PSG), which includes its PC unit, and WebOS operating system and devices.

The company's PSG is a $40 billion business that accounts for about one-third of HP's total global revenues. It operates in more than 170 countries.

Beijing is the first stop for the HP PSG's executive vice-president, Todd Bradley, on an Asian tour after the sell-or-strip comment.

"Because the size of the Chinese market is very important to HP, we chose Beijing as the first stop," Bradley explained.

Bradley's job - he took up the position in June - here is to, "accelerate growth in China and bring more opportunities to the China office by communicating with the executive council."

China has the world's largest number of Internet users and its internal PC shipments put it ahead of the United States, in the second quarter of 2011.

According to the company's financial report last quarter, non-US revenues accounted for 65 percent of HP's total. The BRIC countries (Brazil, Russia, India and China) generated $3.7 billion, up 12 percent year-on-year.

HP has a over 26-year presence in China. Although it declined to reveal what percentage the PSG division contributes to its Chinese business, Isaiah Cheung, vice-president and general manager of at HP China and Hong Kong's PSG division, told China Daily that the unit contributes a "very noticeable part".

Bradley met with HP's Chinese partners upon arrival and spoke with them about the company's new PSG strategy. He said he was "very pleased about how positive our local partners are thinking about the PSG spin-off".

"After a spin-off from HP, the PSG will have better flexibility in adapting to market trends and connecting with our final customers," Cheung said.

Following a meeting with distributors and partners, Bradley has said he will talk with employees and Chinese government officials to assure them that the company's new move will benefit its business in China.

"The new decision is aiming at maximum value for shareholders. It will let HP focus on its cloud and data service and act more aggressive than today," Bradley added.

He went on to say that, for the PSG, the company needs "to focus on what we're good at: workstations and ultra-thin laptops will be our PC road map now".

He explained that the company has about an 8-percent share of the China market and the profit margin of its PC sector "may be comparatively low for HP but still higher than the industry average".

HP has a laptop-manufacturing operation in Chongqing and has said that operation will get more investment to expand its export capabilities in the future.

Leo Apotheker, HP's president and CEO, said that, in accordance with their latest financial statement, the company will discontinue development and support for WebOS devices - specifically the TouchPad and WebOS phone.

However, Bradley said the company will still invest aggressively in the WebOS operating system and ecosystem application.

"Please wait for more interesting products for our WebOS," was his playful remark.

The company has said it may take months to re-evaluate the PSG division, but is still committed to Chinese customers and partners and to providing consistent, high-quality products and services in the future.

Estimated annual sales revenues of HP are about $127 billion.