HP plans ‘evaluation’ of ailing business units
SEC filing indicates readiness to ditch underperforming divisions
Hewlett-Packard announced it would be evaluating the status of divisions within its corporate structure that failed to meet business goals, Bloomberg reported.
In the company's annual 10-K filing submitted to the US Securities and Exchange Commission (SEC) on 27 December, HP said, "We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives."
The language is the clearest indication yet that CEO Meg Whitman may be rethinking her stated commitment to the tech giant's PC business, which she has pursued since taking the reins in September 2011.
Whitman inherited a troubled balance sheet showing five consecutive quarters of sliding sales and senior management turnover. Streamlining measures led to the announcement of 29,000 job losses last year and writedowns in the third and fourth quarter from two separate acquisitions (EDS in 2008 and Autonomy in 2011) amounted to over $16bn.
December's 10-K filing could be an indication that HP is finally bowing to Wall Street pressure to jettison certain businesses. Personal computers represent a shrinking market as industry figures show a burgeoning mobility segment. IDC predicts that sales of smart mobile devices (SMDs) will grow by 20%, generate 20% of all IT sales, and drive 57% of all IT market growth in the coming year. Without SMDs, IDC calculates IT industry growth would be just 2.9%.
"When we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the achievement of our strategic objectives," Hewlett- Packard said. The filing also said HP may "dispose of a business at a price or on terms that are less desirable than we had anticipated" and that "the impact of the divestiture on our revenue growth may be larger than projected".
The company also reported in the filing that the US Justice Department had opened an investigation into the Autonomy affair. HP accuses the software company of misrepresenting its status and inflating sales figures prior to the agreed purchase.
HP shares were up 4.2% at $14.25 when markets closed in New York on Monday. The stock dropped 45% in 2012.