Hewlett-Packard Comp. (HPQ) is still the number one supplier of
personal computers, but its moves in recent weeks have baffled many. It killed its first
webOS tablet two weeks ago, after only giving the device six weeks
to prove itself on the market. At the same time, it announced that it
would be looking to get rid of its
consumer personal computer business.
HP also reported that it plans to announce that
its board of directors has authorized the exploration of strategic alternatives
for its Personal Systems Group (PSG). 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.
The PSG is HP's unit responsible for making consumer PCs. Apparently the
"other transaction" is more or less off the table, according
to PSG head Todd Bradley, who spoke with Reuters in an
interview. HP now seems to have its mind set on a spin-off.
Mr. Bradley states, "A standalone company could and will do what's most
required to drive value for shareholders and partners."
He says that "the numbers don't support" a sale. In other
words, HP might want to sell the PSG to somebody, but no major
manufacturer has the cash to stomach the $10-12B USD cost of the unit.
Taiwan's ASUSTEK Computer, Inc. (TPE:2357)
and Acer Inc. (TPE:2353)
-- two prospective buyers don't have the cash. Nor does Hong
Kong-based Lenovo Group, Ltd. (HKG:
0992), which has $3.8B USD cash on hand and would have to relying on
a heavily stock-based purchase should it make an offer.
For now, Mr. Bradley is soldiering along like business as usual. He
comments, "[R]egardless of what happens, we're the largest PC company in
the world. We need everybody energized, and while this isn't business as usual,
we need people to go out and sell products every day."
He's currently on an Asian trip to strengthen the PSG's Chinese manufacturing
capabilities. The PSG plans to increase investments in China,
consolidating its six local employee sites into a single large campus, located
near Shanghai, which it will make its regional headquarters. It also
plans on expanding its manufacturing in China.
Securing cheap, steady contracts for Chinese parts and labor has been a key to
Apple Inc.'s (AAPL) rise to third place in the U.S. personal
Mr. Bradley says a webOS revival could be in the works. Following the
rash of interest during the webOS clearance, he says several
manufacturers (presumably tablet or smart phone manufacturers) have approached
HP about licensing the OS. He also would not
rule out a TouchPad revival, stating, "Tablet computing is a segment of
the market that's relevant, absolutely."
The PSG head, recently named Fortune's "smartest executive", has
big plans -- he says he hopes to be chief executive at the new company, should
a spinoff occur. He states, "Unwinding the integration that's taken
place within HP will be enormous amounts of work and effort, justified by the
return we think we'll be able to provide to our shareholders. My
intention would be to lead [the PSG] through this transaction...and if it's a
standalone public company, to lead that."
quote: Mr. Bradley states, "A standalone company could and will do what's most required to drive value for shareholders and partners."