Palo Alto, Calif. - Hewlett-Packard has decided to spin-off or sell its personal systems group (PSG), which markets PCs, tablets and smartphones, and discontinue sales of its WebOS-based tablets and smartphones.

The decisions were made as a part of an overall strategy to go after other software and Cloud-based services and markets.

HP said in a statement, "The personal computing market is quickly evolving with new form factors and application ecosystems. Given these realities, HP believes it is in the best interests of the company and its shareholders to explore ways for PSG to position itself to address these rapid changes and maintain its technological and market leadership positions."

HP's board approved the exploration of strategic alternatives for PSG which will include a broad range of options, such as a full or partial separation of PSG from HP through a spin-off or other transaction. The process will take 12 to 18 months.

Leo Apotheker, HP president/CEO, added, "As we explore alternatives for PSG, we will be focused on a path that not only enhances value for HP shareholders but also provides greater opportunities for our people, businesses, partners and customers. While this process is underway, we will remain focused on operating our businesses."

HP will discontinue operations for WebOS devices, specifically the TouchPad and WebOS phones, by the end of the year. The devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of WebOS software going forward.

Cathie Lesjak, executive VP and chief financial officer, said on an analysts call, which also revealed fiscal third-quarter results, that when WebOS software for its TouchPad tablet PC was launched, it received "strong reviews." But the TouchPad, introduced in July, had "disappointing sell-through" and that its $100 price cut didn't help. HP expected "an even larger loss in Q4." Lesjak said HP estimated that it would have taken two years to make WebOS devices profitable but there was no guarantee that it would happen with such a new operating system.

In answer to a question about WebOS software, Apotheker, said, "We are looking at all strategic options. Software received very well. We are looking at all our devices to other devices ... and looking at all possible business models to best extract value out of WebOS."

HP's decision to exit the computer and mobile device business is part of a dramatic transition for the company to sharpen HP's focus on its strategic priorities of Cloud, solutions and software with an emphasis on enterprise, commercial and government markets.

The announcement was made at the same time as the announced acquisition of Autonomy Corp., a U.K.-based infrastructure software company estimated more than $10 billion in cash.

"The addition of Autonomy will accelerate HP's ability to deliver on its strategy to offer Cloud-based solutions and software that best addresses the changing needs of businesses," Apotheker said.

HP reported in its fiscal third quarter, ended July 31, its PSG revenue declined 3 percent year over year, with a 5.9 percent operating margin. PSG remains the PC market leader in terms of units, revenue and profit share. The group represents 31 percent of HP's revenue in the quarter.

HP's net revenue for the quarter was up 1 percent to $31.2 billion year on year, while GAAP net earnings were up 9 percent to $1.9 billion.

HP merged with Compaq to take take on the personal computer market in 2002.  HP bought Palm, and its Web OS platform for $1.2 billion last April.
Release Date: 
2011-08-18 17:58:59
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Abstract Web: 
Palo Alto, Calif. - Hewlett-Packard has decided to spin-off or sell its personal systems group (PSG), which markets PCs, tablets and smartphones, and discontinue sales of its WebOS-based tablets and smartphones.
Article Type: 
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