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.

What’s next?

Tags: electronics industry, google, last job, pc hp, private equity firms

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12 Comments

  1. Chris Handley
    August 31, 2011 13:40

    Just remember that AGILENT is an anagram of GENITAL :o) as a Tectronix happily pointed out just after the spin off.

  2. Anonymous
    August 24, 2011 10:27

    I thought Agilent make the instruments these days.
    Though it always takes me about 5 minutes to remember their name.

  3. David Manners
    August 23, 2011 17:25

    Over-generous of you, Mike, but my efforts to buy one off Dixons last night stalled pitifully as the site went down over and over again. I see amazon.co.uk have stock still and are expected to drop the price at sometime – trouble is no one knows when.

  4. Mike Bryant
    August 23, 2011 17:16

    “HP’s discontinued tablet computer, the Touchpad, has briefly become the UK’s most wanted gadget.”
    http://www.bbc.co.uk/news/technology-14633434
    And all thanks to Mannerisms ? :-)

  5. David Manners
    August 22, 2011 11:08

    Yes indeed, greg, it’s amazing how some of these top people can be so totally convinced about courses of action which are so wrong. Maybe it has something to do with the constant flow of M&A suggestions which they get from bankers hoping to profit from a fee for implementing a takeover.

  6. Chris Handley
    August 22, 2011 10:59

    Bill and Dave will be spinning so fast they will end up in Australia. Talk about a company losing the plot (again and again and….)
    At least Agilent (the real HP) seems to be OK.

  7. Mike Bryant
    August 19, 2011 19:18

    (My) share price now plummetting like a stone. Bill and Dave WILL be turning in their graves. This is not the HP they created and nurtured.

  8. Anonymous
    August 19, 2011 18:23

    HP lost their way in the early 90′s. I remember them as a great T&M company like Tektronix, with such quality products like the HP4145A and the wonderful HP4274/4275 LCR meters. Who makes stuff with quality like that these days?

  9. Mike Bryant
    August 19, 2011 15:49

    Now that Autonomy isn’t, will people still want to use their products and services ?

  10. Mr Cynical
    August 19, 2011 15:16

    Calculator? you won’t need one of those, there will be hundreds of virtual calculators on a Cloud?

  11. Anonymous
    August 19, 2011 08:26

    This is all nice and dandy, the real question is, what will happen with the calculator division ? Will I still be able to buy a HP35S two years from now ?

  12. greg
    August 19, 2011 03:04

    What a wonderful course Carly set. I hope Bill and Dave aren’t watching.

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