Hewlett-Packard (HP) has announced that its board of directors has authorized the evaluation of strategic alternatives for its Personal Systems Group (PSG), including the exploration of the separation of its PC business into a separate company through a spin-off or other transaction.
PSG has a proud history of innovation and technological leadership as well as a strong operating track record and industry-leading profitability, said HP. PSG is the leading manufacturer of personal computers in the world and had annual revenues of approximately US$41 billion in fiscal year 2010. PSG enjoys leading global market positions in consumer and commercial PCs.
HP is implementing a plan to fundamentally transform the company. An important component of the plan is focusing its investments, resources and management attention to drive higher value solutions to enterprise, small and mid-size business and public sector customers. HP believes that the exploration of alternatives for PSG will help the company accomplish its strategic goals and pursue profitable growth and enhanced shareholder value. A post-transaction HP would continue to help its customers manage the information explosion and address their most critical needs through a portfolio that spans printing, software, services, servers, storage and networking.
The personal computing market is quickly evolving with new form factors and application ecosystems. Given these realities, HP believes it is in the best interests of the company and its shareholders to explore ways for PSG to position itself to address these rapid changes and maintain its technological and market leadership positions.
HP management, together with its financial and legal advisers, will explore strategic alternatives, including the exploration of the separation of its PC business into a separate company through a spin-off or other transaction that would likely be tax free to US shareholders. HP expects that the process could be completed within approximately 12-18 months.
There can be no assurance that any transaction regarding PSG will be pursued or completed. The company does not intend to disclose developments with respect to the progress of its strategic alternatives review process until such time as the HP board of directors approves or completes a transaction or otherwise determines that further disclosure is appropriate.
Meanwhile, HP will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. The devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of webOS software going forward.