If you thought the move to pull the sale of webOS devices, like the TouchPad, from HP was a drastic and dramatic decision then the news that it is looking to sell off its Personal Systems Group, which is responsible for is laptops and desktops, will come as even more of a shock.
Confirming the news in the company’s latest earnings report. HP has said that it is looking to offload its PC division as it concentrates on its new found love of becoming a business to business rather than a consumer facing company.
As part of the transformation, HP announced that its board of directors has authorised the exploration of strategic alternatives for the company's Personal Systems Group. 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.
“Personal Systems Group (PSG) revenue declined 3 per cent year over year with a 5.9 per cent operating margin,” HP has said in a statement before adding that “PSG remains the PC market leader in terms of units, revenue and profit share.”
HP plans instead to focus on its investments, resources and management attention to drive higher value solutions to enterprise, small and midsize business and public sector customers.
“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 chief executive officer and former SAP man. “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.”
“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.”
HP says that it will explore strategic alternatives, including the separation of its PC business into a separate company through a spin-off or other transaction that would likely be tax free to US shareholders.
It’s a similar approach to what Motorola did with its consumer and enterprise businesses, something that only this week saw the sale of the newly formed consumer division, Motorola Mobility, being to sold to Google for $12.5bn. HP could be hoping that a similar move reaps similar benefits.
HP expects that the process could be completed within approximately 12-18 months.