Non-PC HP Goes Cloudy
Another day, another mega-deal. HP is to spin off its PC division, discontinue the TouchPad tablet PC and buy Autonomy in a re-focussing of effort to concentrate on providing cloud computing and software services.
HP’s new CEO, Leo Apotheker, has a software background. His last job was CEO of SAP.
HP’s $9.4 billion revenue PC division was the focus of Carly Fiorina’s tenure as CEO of HP culminating in HP’s controversial 2002 takeover of Compaq.
The entire electronics industry thought it was insane for HP to buy a commoditising business and so it has proved to be. The margins just aren’t good enough, as HP has realised for some time.
HP’s PC division accounts for nearly a third of HP’s total $31 billion revenues. It is being said that private equity firms Blackstone and KKR are interested in buying it. God help those guys.
The printer activity and the networking and storage products will be retained within HP.
The TouchPad PC, launched last month, has already had its initial $500 price slashed by $100 in an attempt to find sales.
In Europe, 15,000 TouchPads were sold in July compared to 160,000 iPads and, in the first week of August, 700 TouchPads were sold in Europe compared to 43,000 iPads.
It will be discontinued.
The take-over of Cambridge search specialist Autonomy will cost HP $11 billion – nearly 80% more than the company was valued by the stock market before the bid. Autonomy had revenues of $1 billion last year. The deal means an $800 million plus lob-out for founder Mike Lynch who has an 8% shareholding.
It’s all quite a surprise for the dog days of August – coming before people had digested the Moto-Google deal.