HP to ditch PC and webOS businesses – confirms Autonomy offer

18 Aug 2011

Technology giant HP said it is exploring “strategic alternatives” for its Personal Systems Group and just months after revealing new webOS-based TouchPad tablet and Pre smartphone products says it is shutting down operations for webOS devices.

In what has been a dramatic few hours for the company, HP reported third-quarter revenues of US$31.2bn, which were pretty flat with just a 1pc year-on-year difference.

HP’s commercial businesses remain healthy, with 5pc revenue growth year over year. HP’s consumer businesses, within PSG and IPG, were collectively down 15pc year-over-year.

It warned it will be revising full-year 2011 revenue estimates to between US$127.2bn and US$127.7bn. For the fourth quarter, HP estimates revenue of about US$32.1bn to US$32.5bn.

The company, which will be making a strategic realignment similar to that made by IBM when it sold its computer manufacturing operations to Lenovo in 2005 for US$1.75bn, is however pressing ahead with its plans to acquire Autonomy, a global leader in enterprise infrastructure software which was started up in 1996 by Carrick-on-Suir native Dr Mike Lynch.

HP announced the terms of a recommended transaction for all of the outstanding shares of Autonomy Corporation plc for stg£25.50 (US$42.11) per share in cash, or about US$10bn – one of the largest acquisitions in the Silicon Valley company’s history.

Bold next steps for HP

Recently appointed HP CEO Leo Apotheker said the intention now is to sharpen the company’s focus on strategic priorities of cloud, solutions and software, with an emphasis on enterprise, commercial and government markets.

HP’s board of directors has authorised the exploration of strategic alternatives for the company’s Personal Systems Group.

Options may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.

HP will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. The company said the devices have not met internal milestones and financial targets.

“We’re focused on improving performance across the business,” Apotheker said.

“HP is taking bold, transformative steps to position the company as a leader in the evolving information economy. Today’s announced plan will allow HP to drive creation of long-term shareholder value through a focus on fewer fronts, thereby improving its ability to execute, invest in innovation and drive a higher-margin business mix.”

Photo: HP CEO Leo Apotheker

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years