HP to spin out PCs, drop webOS products
Dylan McGrath 8/18/2011 3:47 PM EDT
Hewlett-Packard CEO Léo Apotheker confirmed that rhe company will explore the spin out or sale of its PC business and said HP would discontinue operations for webOS devices, specifically the TouchPad tablet and webOS phones.
SAN FRANCISCO—Hewlett-Packard Co. Thursday (Aug. 18) confirmed that it would explore the spinout or sale of its PC business and announced that it would discontinue operations for webOS devices, specifically the TouchPad tablet and webOS phones.
HP (Palo Alto, Calif.) issued a statement about the PC spinout after it was reported by the Bloomberg news service and the Wall Street Journal. HP also announced an agreement to acquire Autonomy Corp., an enterprise software firm based in Cambridge, England, for roughly $10.2 billion.
In a conference call, HP CEO Léo Apotheker said that the PC market is undergoing rapid transformation and that HP’s PC business needs flexibility and agility in order to remain the world’s largest PC vendor, and that the company would explore the possibility of a spinout of the unit or another transaction. This exploration is expected to take 12 to 18 months,Apotheker said.
HP said its board of directors authorized the exploration of strategic alternatives for its Personal Systems Group, the firm’s PC marketing unit. HP is the largest PC seller in the world, with market share of about 18 percent total across desktops and notebooks.
Also Thursday, HP cut its sales forecast for fiscal 2011, saying it now expects revenue of about $127.2 billion to $127.6 billion, down from its previous estimate of $129 billion to $130 billion.
The discontinuation of products that run webOS, the operating system HP acquired when it bought Palm Inc. in 2010, came as a suprise. Apotheker indicated that it was a difficult decision, but that HP’s webOS products were not selling adequately. “Our webOS devices have not gained enough traction in the market among consumers an we see too long a ramp up,” Apotheker said.
Apotheker said HP would explore strategic alternatives for developing webOS and the webOS ecosystem.
Market research firm Technology Business Research Inc. (TBR) said in a report circulated Thursday that the acquisition of Autonomy indicates that HP may finally move “all in” on both cloud and business analytics. In making the deal, Apotheker proves his ongoing commitment to software as a main driver of HP’s corporate future according to TBR.
HP reported preliminary sales of $31.2 billion for its fiscal third quarter, up from $30.7 billion for the same period last year.
The company reported a earnings per share in accordance with generally accepted accounting principles (GAAP) of 93 cents, up from 75 cents in the year-ago quarter.
On a non-GAAP basis, excluding charges, HP reported earnings per share of $1.10, up from $1.08 in the yar-ago quarter.
HP’s fiscal third quarter sales and non-GAAP earnings per share were in line with consensus analysts’ expectations, according to Yahoo Finance.
For the current quarter, HP said it expects sales of $32.1 billion to $32.5 billion.
The guidance fell short of consensus analysts’ expectations, which called for sales of $34 billion, according to Yahoo Finance.