HP kills mobile business, considers selling PCs

Updated: 2011-08-19 06:55


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SAN FRANCISCO - Hewlett-Packard, the world's largest personal computer maker, on Thursday confirmed that it is considering selling its personal computer business, along with announcements of an end to its tablet computer and smartphone products.

HP's board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG), the Palo Alto, California-based company said in a statement.

According to HP, annual revenue for PSG totals $40 billion, and the group's business includes personal computers, technical workstations, webOS-powered tablets and smart phones, as well as personal storage solutions and Internet services.

"HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction," the company said in a statement.

It added that the process of separation of its PC business could be completed within about 12 to 18 months.

Earlier Thursday, Bloomberg cited people with direct knowledge of the matter as saying that HP plans to spin off its PC business to lessen its dependence on the lower-margin division.

The world's largest PC maker has been under investors pressure to explore alternatives of its PC division, which has seen business slowing due to factors including weaker consumer demands.

HP on Thursday reported that in its 2011 third fiscal quarter ended July 31, revenue for the company reached $31.2 billion, up 1 percent from the same period a year earlier.

However, revenue for PSG, which accounts for nearly one-third of HP's total sales, dropped 3 percent from the year-ago quarter. The company's consumer businesses, within PSG and Imaging and Printing Group (IPG), were collectively down 15 percent year over year.

HP on Thursday also made an unexpected announcement that it will completely shut down its webOS operations, specifically the TouchPad tablet and webOS phones.

TouchPad, HP's first tablet computer, was just introduced in February. The webOS is a mobile operating system initially developed by Palm which was acquired by HP in last April for $1.2 billion. The Palm unit under HP has been responsible for the webOS software development and webOS-based hardware products.

"The (webOS) devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of webOS software going forward," the company said.

Meanwhile, HP confirmed that it has offered to buy British software company Autonomy Corp. for 42.11 dollars per share in cash, a transaction that has been approved by the boards of directors of both companies, and is expected to be closed by the end of calendar 2011.

The deal will worth nearly $10.3 billion and represents one of HP's largest acquisitions to date.

Currently listed on the London Stock Exchange, Autonomy is Britain's second-largest software maker with joint headquarters in Cambridge, Britain and San Francisco.

Last December, Microsoft and Oracle were reportedly bidding on Autonomy.

HP Chief Executive Officer Leo Apotheker is the ex-CEO of German enterprise software giant SAP AG. In March, he announced his strategic vision for HP, saying that the company will build a platform combining cloud computing, connectivity and software.

"In March we outlined a strategy for HP, built on cloud, solutions and software to address the changing requirements of our customers, shaped heavily by secular market trends that are redefining how technology is consumed and deployed," Apotheker said Thursday in a statement.

"Since then, we have observed the acceleration of these market trends, which has led us to evaluate additional steps to transform HP to meet emerging opportunities. We believe the acquisition of Autonomy, combined with the exploration of alternatives for PSG, would allow HP to more effectively compete and better execute its focused strategy," he noted.

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