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HP to spin off PC business to focus on enterprise software

post #1 of 254
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Hewlett Packard, the world's largest PC maker, has announced plans to spin off its PC business and scrap its recently acquired webOS smartphone and TouchPad tablet business to focus on software and services.

According to a report by Bloomberg, HP "has been aiming to lessen its dependence on lower-margin PCs, where growth has stalled as consumers flock to tablet-style computers like those made by Apple."

Recent reports have documented HP's slide, along with most other top PC makers, in shipments of new computers as Apple continues to grow its sales of Macs and particularly iPads.

Apple was the only maker in the top 5 PC vendors of Western Europe to experience growth in computer shipments, and the company just surpassed HP in mobile PC sales, largely due to booming sales of iPads.

HP has been unable to gain traction for its own iPad alternative, despite a campaign launched last year to buy Palm for $1.2 billion and use its webOS to power a new generation of mobile devices.

HP is scheduled to announce quarterly earnings after the market closes today, and is expected to detail its $10 billion plan to acquire Autonomy Corporation, the second largest UK software maker, headquartered in Cambridge, as it spins off its PC hardware unit.

Autonomy develops enterprise search and data processing technologies that look for meaning in text, voice and video data, whether in a database, files or streams. Much of its technology has origins in research conducted at the University of Cambridge.

Changing landscape of personal computing

Apple's cofounder Steve Wozniak originally worked for HP, but the firm didn't see any value in his design for what would later become the first Apple computer. Wozniak subsequently worked with Steve Jobs to develop his design into a business.

Jobs was forced out of Apple a decade later, only to return in another ten years and convert the company he helped originate into a revitalized powerhouse, building not just computers but also the iPod, iPhone and iPad; a global chain of retail stores; the world's largest media store and new online services.

Following a series of mergers and acquisitions, HP represents a combination of Apollo, DEC, Compaq, 3Com and Palm, but is now valued at just $62 billion, compared to Apple's current market cap of $338 billion.



Apple acquired HP's vacated "Executive Briefing Center" Pruneridge campus in Cupertino, California, and has plans to develop the site, along with adjacent land it already owned, into a futuristic new "Apple Campus 2" site, located one freeway exit away from its current Infinite Loop headquarters.

post #2 of 254
The iPad is winning.
post #3 of 254
Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?

Sorry if this is a stupid question.
post #4 of 254
Aim at the wall, keep throwing... Eventually, something must stick!
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post #5 of 254
Some say Apple should buy Dell, but the synergy may be ripe for HP.

Though it is expensive.
post #6 of 254
It sounds like HP is following IBM in an orderly exit from the hardware business. They're going to do software and services.

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post #7 of 254
Quote:
Originally Posted by AaronJ View Post

Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?

Similar, but not exactly.

A more accurate comparison would be HP spinning off its testing instruments group as Agilent in 1999. A more recent scenario was Motorola Inc. separating into Motorola Solutions and Motorola Mobility (the former is considered the direct corporate descendant of Motorola, the latter the spinoff).

Lenovo had existed as a separate company for almost twenty years prior to their purchase of IBM's PC Division in 2005. There was no spinoff, it was a direct transfer from IBM to Lenovo. Same with IBM's exit from the hard drive business; I believe they sold the division to Hitachi.
post #8 of 254
This sounds like a smart move by HP. Reading the tea leaves over manufacturing PC hardware must be a grim reality these days.

This is good for Apple. One wonders what a major retraction in large name brand hardware vendors will mean for PC sales in general? When faced with PC brands that are unfamiliar will consumers pause and then go for a Mac instead?
post #9 of 254
Sounds like IBM, will Lenovo buy HP-PC or Dell or Toshiba or better yet Google.
post #10 of 254
Quote:
Originally Posted by JimDreamworx View Post

Some say Apple should buy Dell, but the synergy may be ripe for HP.

Though it is expensive.

Michael Dell made a really dumb comment about Apple many years ago.

Apple should buy Dell and then shut them down, fire everybody and call it a day. Liquidate the entire company. Apple would end up getting the last laugh.

If I was Steve Jobs, I'd buy Dell, not for their expertise, their know how, their knowledge or anything like that. Making shitty, cheap PC's and selling them for dirt cheap is something that a crackhead bum is probably qualified to do. That is not a market that Apple wants to be a part of.
post #11 of 254
Quote:
Originally Posted by cvaldes1831 View Post

Similar, but not exactly.

A more accurate comparison would be HP spinning off its testing instruments group as Agilent in 1999. A more recent scenario was Motorola Inc. separating into Motorola Solutions and Motorola Mobility (the former is considered the direct corporate descendant of Motorola, the latter the spinoff).

Lenovo had existed as a separate company for almost twenty years prior to their purchase of IBM's PC Division in 2005. There was no spinoff, it was a direct transfer from IBM to Lenovo. Same with IBM's exit from the hard drive business; I believe they sold the division to Hitachi.

OK, gotcha. Thanks.
post #12 of 254
A Spin Off is the first step for another company to purchase part of your business. So, the million dollar question is, who is going to buy the HP PC Division?
post #13 of 254
This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.
post #14 of 254
All these companies can't handle the heat when it comes to designing, marketing and supporting hardware. They're dropping like flies.
post #15 of 254
The reality is that the PC is an old technology and becoming an outdated business model. For future competition, others need to develop viable technologies and businesses that will meet the future demands of the market.


Quote:
Originally Posted by rp2011 View Post

This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.
post #16 of 254
Quote:
Originally Posted by AaronJ View Post

Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?

Sorry if this is a stupid question.

i hope not, IBM to Lenovo lowered quality slightly after a year or so of crappy designs (if you wanted to upgrade RAM that is)

imagine worse quality HP, they would have to deliver all computers by hand and Laptops probably wouldn't move around so well....

(also, as a note, Lenovo grew globably, including Europe and USA...(anouther note, it is not in the top 5 (.7% behind apple on 23.1% growth)))

PC means personal computer.  

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PC means personal computer.  

i have processing issues, mostly trying to get my ideas into speech and text.

if i say something confusing please tell me!

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post #17 of 254
Quote:
Originally Posted by noexpectations View Post

A Spin Off is the first step for another company to purchase part of your business. So, the million dollar question is, who is going to buy the HP PC Division?

Not necessarily.

In my earlier example, I mentioned HP spinning off Agilent in 1999. Agilent is still a separate corporation and trades publicly on the NYSE under the symbol A. No one acquired Agilent.

The attractiveness of the spun-off PC unit will be based on several factors, including things like the patent portfolio, transfer rights to the HP brand, etc. My guess is that some Chinese computer company would be most interested in picking up the brand.
post #18 of 254
Quote:
Originally Posted by JimDreamworx View Post

Some say Apple should buy Dell, but the synergy may be ripe for HP.

Though it is expensive.

When "they" say shit like this I have to wonder where that idea comes from. Why would Apple buy one of two loser companies when they are doing just fine as Apple? Take a look at their numbers much?

Dell shouldn't be bought by Apple. They should be flushed down the toilet.
post #19 of 254
Doesn't HP also have a large server business?

Is that affected by the spin-off?

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post #20 of 254
Quote:
Originally Posted by rp2011 View Post

This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.

True, but HP isn't offering competition. They suck at what they do. That's like the Pittsburgh Steelers playing a local high school football team.

True competition comes from innovation and balls. HP has neither. Nobody is willing to put what it takes into coming up with new ideas and new ways of doing things. They'd rather copy Apple and come up with cheap crap. Don't make the mistake of calling that competition.
post #21 of 254
I wonder where the imaging and printing business and enterprise storage and servers business will wind up in the spinoff. Right now services and software are only about one third of HP's business. It would be strange if the company that existed after the spinoff was such a small piece of the current company. And who will replace HPQ in the Dow Jones Industrials?
post #22 of 254
Meanwhile on another front...

Here's an interesting read:


http://fosspatents.blogspot.com/

Quote:
As odd as it may seem, it's increasingly likely that -- come March 2012 -- Google could be trying to consummate the acquisition of a company that's legally barred from importing Android devices into the United States. How's that for a dowry?


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post #23 of 254
Quote:
Originally Posted by rp2011 View Post

This is bad news for all of us. We need strong competition to drive innovation and competitive pricing. Hopefully the spun off HP can survive and thrive. Or be sold to capable hands.

I disagree. Apple's prices are more competitive now than they've ever been. I don't even recommend or try to push Apple products on people anymore. Apple launches are crowded enough as it is, and it's only getting worse. I actually recommend windows, android and even webos to people I meet who I don't like, and I do it with a serious face.

Where is the innovation coming from other companies? I just see a bunch of talentless monkey copycats trying to cash in on the iPad craze, and failing miserably while trying. Apple does what it does regardless of what others are doing.

I don't buy into the "Apple needs competition to drive innovation and competitive pricing" argument. If a certain competitor is actually innovating, then fine, but the evidence tells me that most companies are not innovating at all, and some of them deserve to go bankrupt and die off. That is evolution.
post #24 of 254
HP wants to get rid of its PC operations like Motorola got rid of its mobile division. Maybe they should advertise their patent treasure chest.
post #25 of 254
Quote:
Originally Posted by cvaldes1831 View Post

Not necessarily.

In my earlier example, I mentioned HP spinning off Agilent in 1999. Agilent is still a separate corporation and trades publicly on the NYSE under the symbol A. No one acquired Agilent.

The attractiveness of the spun-off PC unit will be based on several factors, including things like the patent portfolio, transfer rights to the HP brand, etc. My guess is that some Chinese computer company would be most interested in picking up the brand.

I don't know the details of the Agilent spin off, but one way this works is that shareholders of HP stock on a certain date are given shares in the new company (it could be as simple as "if you have one share of HP, you now own one share of HP and one share of HP PC." but some other ratio is possible; makes no difference). From that point onward, the new company is a separate entity with its own board of directors, employees, etc. The shareholders are free to sell their shares or whatever. The important point is that the new "spin off" need not (and probably won't) be a subsidiary of the original HP. So by spinning off the slow-growth part of the business, the part that's left will (in percentage terms) grow faster than the original company.

I don't see any reason to suspect that the server business would be included in the spin off.
post #26 of 254
This shows up one of the big problems with the way executive compensation works these days. Carly Fiorina did substantial damage to HP. She spun off products that were HPs bread and butter (and in the form of Agilent, are still a success) in a demented drive to be in the newer, more exciting PC business.

Long term result, having to get rid of the monster she created.

Meanwhile, she continues to enjoy the extreme wealth given to her for what turned out to be poor performance.

I have no problem with top executives getting stinking rich - Steve Jobs for example fully deserves it, as do Brin & Page (even though I increasingly hate Google), but there are so many people who have been grossly over compensated.
post #27 of 254
Quote:
Originally Posted by quinney View Post

And who will replace HPQ in the Dow Jones Industrials?

Hmm... I wonder what large market-leading, influential company could be added if HP (or one of the other 30) is moved. That's a tough one.
post #28 of 254
Quote:
Originally Posted by boubou1961 View Post

HP wants to get rid of its PC operations like Motorola got rid of its mobile division. Maybe they should advertise their patent treasure chest.

I wonder if they have the 'Compaq Napkin' in a glass case at HP HQ? I can't think of anything else original they'd have let alone patents, but I guess you never know.
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post #29 of 254
Watching the giants fall is unnerving, if only because the last one standing will inevitably become a monster. Power and corruption are two aspects of the same phenomenon. Within the next 5 years, Apple's and Google's abuses will make the worst of Microsoft look like Reagan did when compared to W.
post #30 of 254
Hold on a second. Where did AppleInsider get the idea that HP was killing off WebOS? No other outlet is reporting that, and those claims aren't answered or sourced here.

Jumping the gun much, AI?
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post #31 of 254

I think AI should update their style guide so that the picture of Apple's new "spaceship" is appended to every article, sort of like a halo. The juxtaposition is amplified when the article in question has nothing to do with the new Apple HQ, for example, when talking about the demise of HP's webOS division.

I have provided a sample. Bathe in the magnificent light of my post! Behold the Apple Halo!
post #32 of 254
Quote:
Originally Posted by PaulMJohnson View Post

This shows up one of the big problems with the way executive compensation works these days. Carly Fiorina did substantial damage to HP. She spun off products that were HPs bread and butter (and in the form of Agilent, are still a success) in a demented drive to be in the newer, more exciting PC business.

Long term result, having to get rid of the monster she created.

Meanwhile, she continues to enjoy the extreme wealth given to her for what turned out to be poor performance.

I have no problem with top executives getting stinking rich - Steve Jobs for example fully deserves it, as do Brin & Page (even though I increasingly hate Google), but there are so many people who have been grossly over compensated.


Somewhat Off Topic....

For an interesting read of how to do it wrong:

The Icarus Factor: The Rise and Fall of Edgar Bronfman, Jr

There are several other excellent books about him.


Bronfman took over the Seagrams Empire at its height -- and spun-off everything, badly. He considered himself a Media Mogul and Business Tycoon the stature of Steve Jobs -- he absolutely destroyed everything he touched

If ever the world needed a bad example - Efer Bronfman is it!
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post #33 of 254
Quote:
Originally Posted by TenoBell View Post

The iPad is winning.

Well, if you call grinding your competition into dust, throwing them into open graves, pissing on them, burying them in flaming horse manure and leaving nothing behind but scorched earth 'winning', then, yes. It's winning.
post #34 of 254
HP's server business is fine. In fact I believe this move is
being made so that they can focus on Enterprise hardware and software.

Fact is even if you make the low end desktops it doesn't necessarily mean that
you capture the desktop/notebook market because you've got the servers installed.

HP has finally thrown in the towel and shoveling a bunch of low end hardware that eventually
costs them money in support costs.

Apple knew this a long time ago. You go after the people that can afford to buy right stuff
the first time.
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post #35 of 254
Quote:
Originally Posted by AaronJ View Post

Does "spin off" mean something along the lines of what IBM did with Lenovo? Or does it means something else entirely?

The answers you've gotten are incomplete. A spin-off is a mechanistic action. Focusing on the results (is it like agilent? Is it like Lenovo?) only confuses the issue.

Specifically, a spin-off occurs when a company restructures operations in such a way that a new entity is created which has its own shares. Specifically, Company A has a subsidiary or division (call it Company B). Company B is wholly part of Company A and the results are reported as part of Company A's results.

Now, Company A spins off Company B. That means that there are now shares in Company B which are tied directly to company B. So, when Company A reports their operating results, Company B is not included.

This can be for any number of reasons. Often, it is done before selling Company B (Lenovo). Or, it can be done to shelter Company A from liability for some reason. Or because Company A thinks that their relationship is holding Company B back from achieving its full potential. Or any number of other reasons.

It becomes more complex than that. When Company A spins off Company B, Company A can sell all of the stock, some of the stock, or none of the stock. So it is entirely possible for Company B to now be an independent company, but still fully owned by Company A (different than a subsidiary because a subsidiary does not have its own stock). The difference is that if Company A owns Company B's stock, the results would now typically (although not always) be reported as investment income rather than operating income.

Quote:
Originally Posted by noexpectations View Post

A Spin Off is the first step for another company to purchase part of your business. So, the million dollar question is, who is going to buy the HP PC Division?

Not at all. See above. There are plenty of examples where subsidiaries or divisions are spun off without selling the company.
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post #36 of 254
"HP, a storied Silicon Valley icon that dominates the personal computing industry, announced it will discontinue the WebOS-based "TouchPad" tablet computer and phones, which have failed to catch on with consumers." - Reuters

Where's all those people who said this week that with Google purchasing Moto, these vendors will go for WebOS instead? And where's all those people who said Samsung would leave Android and focus on it's own Bada OS?

It ain't happening people.
post #37 of 254
Quote:
Originally Posted by JimDreamworx View Post

Some say Apple should buy Dell, but the synergy may be ripe for HP.

Though it is expensive.

What does Dell have that Apple could use? From what I can see Apple could follow in Dell's footsteps of making cheap 'PCs' is they chose to. Luckily for us they don't.
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post #38 of 254
Quote:
Originally Posted by TenoBell View Post

The reality is that the PC is an old technology and becoming an outdated business model. For future competition, others need to develop viable technologies and businesses that will meet the future demands of the market.

I agree. I just hoped HP was up to the challenge and evolve as required. Maybe this was the best option at hand for them since most PC and phone manufacturers other than Apple were chasing each others ass for small margins or even losses.
post #39 of 254
Quote:
Originally Posted by macinthe408 View Post


I think AI should update their style guide so that the picture of Apple's new "spaceship" is appended to every article, sort of like a halo. The juxtaposition is amplified when the article in question has nothing to do with the new Apple HQ, for example, when talking about the demise of HP's webOS division.

I have provided a sample. Bathe in the magnificent light of my post! Behold the Apple Halo!

Plus, the whole thing floats a couple meters off the ground. Surprised no one's mentioned that. (Don't tell that to Steve. He might actually try it.)
post #40 of 254
Quote:
Originally Posted by Dick Applebaum View Post

Somewhat Off Topic....

For an interesting read of how to do it wrong:

The Icarus Factor: The Rise and Fall of Edgar Bronfman, Jr

Thanks for the tip - I will have to track down a copy.
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