Big Changes at HP

HP Will Ditch WebOS Devices, May Spin Off Personal PC Business

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Hewlett-Packard confirmed Thursday it's considering spinning off its personal-computer business and gobbling up the UK-based software company Autonomy. The World's largest computer maker also said it would "discontinue operations for webOS devices, specifically the TouchPad and webOS phones." In a statement HP added it is considering a number of options for its PC division that include "full or partial separation of PSG from HP through a spin-off or other transaction."

According to a Bloomberg report HP may purchase Autonomy for $10 billion. HP confirmed it's in talks with Autonomy to buy the company but no financial terms were revealed.

Autonomy is an enterprise software company that, according to a discription on its website, is the "market leader in the provision of software that automates the analysis of unstructured data, whether in the form of text, audio, images or video." Autonomy is the second-largest software maker in the UK, and also has Bay Area offices.

Analyst Rob Enderle of the Enderle Group says if the reports are true "The end result would be a company that is leaner, more agile, and more focused on markets the CEO (Leo Apotheker) is expert in."

HP began moving more aggressively into the mobile computing market last year with the acquisition of Palm, which HP built its own MobileOS, WebOS, upon. Earlier this year HP released its TouchPad tablet with WebOS, but sales have so far been lackluster.

Speculation of HP's departure from the PC business comes just as forecasts for yearly processor shipments worldwide are expected to slow thanks to a slump in consumer laptop sales. According to IDC companies such as HP and other PC makers are seeing slow gains in PC sales for a second quarter in 2011, partly due to weakened spending and a growing demand for tablets.

Analyst Charles King points out that HP's PSG-Personal Systems Group-generates lower overall operating profits than the company's business-centric enterprise-focused solutions and services organization - even though the PSG division accounted for nearly a third of HP's overall revenues in 2010.

King adds that "spinning off PCs would allow HP to isolate potentially volatile PC sales numbers and muffle their effect on more stable, higher-margin businesses."

A report released Thursday by DisplaySearch suggest HP is losing ground in at least mobile PC sales. DisplaySearch says the Apple topped sales for the mobile PC market last quarter beating out HP for bragging rights. Apple stole the top spot from HP, which sold about 9.7 million units to take second place with 15 percent of the mobile PC market. Apple sold 13.6 million units and commands 21 percent of the mobile PC market.

HP is scheduled to report its earnings after markets close Thursday, and the company could announce the spinoff of its PC division at that time. HP is the largest computer maker in the world and jettisoning its computer division could signal a move in the footsteps of IBM, which transitioned from hardware to software with a stronger focus on the enterprise.

HP's personal computer roots date back to the 1930s with the founding of the company by Bill Hewlett and Dave Packard. The company introduced one of the first mass-market home computers in 1968 and its consumer business accelerated in the 1980s and 1990s. HP merged with Compaq in 2002 to cement its dominance in the PC market.

The news has apparently put a crush on the web servers that host Autonomy's website. It was inaccessible at the time of this writing from a location in the Southwestern United States.

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