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HP ready to offload PC business

by Stuart Wilson, Friday 19 August 2011

HP has made the momentous decision to evaluate ‘strategic alternatives’ for its personal systems group (PSG) including the possibility of selling the business or spinning it off into a separate company. HP’s PSG unit is the leading global supplier of PCs with sales of US$41 billion in fiscal 2010 and strong positions in both the consumer and corporate space.

HP has also announced that it will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. In its press release, HP declared: "The devices have not met internal milestones and financial targets. HP will continue to explore options to optimiSe the value of webOS software going forward."

HP claims that the decision forms part of a transformation plan designed to focus more fully on high value solutions for the public sector and business market. Even without PSG, HP’s portfolio would still include printing, software, services, servers, storage and networking.

"The exploration of alternatives for PSG demonstrates our commitment to enhancing shareholder value and sharpening our strategic and financial focus," said Léo Apotheker, HP president and CEO. "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.”

“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 added.

"We believe exploring alternatives for PSG could enhance its performance, allow it to more effectively compete and provide greater value for HP shareholders," said Apotheker. "PSG is a world-class scale business with a leading market share position and a highly effective supply chain and broad reach and go-to-market capabilities. We believe there are alternatives that could afford PSG more autonomy and flexibility to make strategic investment decisions to better position the business for its customers, partners and employees."

The next step will see HP management explore options for the PSG business with this process expected to take between 12 and 18 months. In its press release, HP declared: “There can be no assurance that any transaction regarding PSG will be pursued or completed. The company does not intend to disclose developments with respect to the progress of its strategic alternatives review process until such time as the HP board of directors approves or completes a transaction or otherwise determines that further disclosure is appropriate.”

Apotheker 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. The strength of PSG is a testament to our world-class team of employees and reflects their commitment to innovation and customers and partners."

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