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HP scraps WebOS, plots PC spin-out

Posted: 25 Aug 2011     Print Version  Bookmark and Share

Keywords:spin out  PC business  acquisition 

Hewlett-Packard Co. (HP) announced an agreement to acquire Autonomy Corp., an enterprise software firm based in Cambridge, England, for roughly Rs.45,739.91 crore ($10.2 billion).

HP also has plans to scrap the operations of its WebOS devices, specifically its TouchPad tablet and WebOS phones, and plans to sell or spin out its PC business.

HP issued a statement about the PC spinout after it was reported by the Bloomberg news service and the Wall Street Journal.

In a conference call, HP CEO Leo Apotheker said that the PC market is undergoing rapid transformation and that HP's PC business needs flexibility and agility to remain the world's largest PC vendor. The company is exploring the possibility of a spinout of the unit or another transaction. This exploration is expected to take 12 to 18 months, Apotheker said.

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Apotheker: Our WebOS devices have not gained enough traction in the market among consumers and we see too long a ramp up.

The discontinuation of products that run WebOS, the operating system HP acquired when it bought Palm Inc. in 2010, came as a surprise. Apotheker indicated that it was a difficult decision, but that HP's WebOS products were not selling adequately. "Our WebOS devices have not gained enough traction in the market among consumers and we see too long a ramp up," he said.

Apotheker said HP would explore strategic alternatives for developing WebOS and the WebOS ecosystem.

HP said its board of directors authorised the exploration of strategic alternatives for its personal systems group, the firm's PC marketing unit. HP is the largest PC seller in the world, with market share of about 18 per cent total across desktops and notebooks.

HP has also cut its sales forecast for fiscal 2011, saying it now expects revenue of about Rs.5.70 lakh crore ($127.2 billion) to Rs.5.72 lakh crore ($127.6 billion), down from its previous estimate of Rs.5.78 lakh crore ($129 billion) to Rs.5.83 lakh crore ($130 billion).

Buying Autonomy
HP believes that its Anatomy purchase puts HP in a position to be a leader in a large and growing space. Autonomy has a strong position in the Rs.89,686.10 crore ($20 billion) enterprise information management space and is uniquely positioned to continue growth within this space. Furthermore, key Autonomy assets would provide HP with the ability to reinvent the Rs.2.47 lakh crore ($55 billion) business analytics software and services space, which is growing at 8 per cent annually.

Autonomy's services also complement HP's existing technology portfolio and enterprise strategy: Autonomy offers solutions that are synergistic across HP's enterprise offerings and strengthens capabilities for data analytics, the cloud, industry capabilities and workflow management. This will bolster HP's cloud offerings with key assets for information management and data analytics. Autonomy also complements existing HP offerings from enterprise servers, storage, networking, software, services and its imaging and printing group.

"Autonomy presents an opportunity to accelerate our strategic vision to decisively and profitably lead a large and growing space," said Apotheker. "Autonomy brings to HP higher value business solutions that will help customers manage the explosion of information."

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