Stressed HP ponders asset disposals
Published 02/01/2013 | 05:00
COMPUTER and printer-maker Hewlett-Packard (HP) is evaluating the disposal of businesses that fail to meet goals.
This revelation came a year after CEO Meg Whitman said she didn't plan to spin off HP's PC division.
"We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives," HP said in a filing with the US Securities and Exchange Commission.
That language wasn't included in the document a year earlier.
CEO since September 2011, Ms Whitman is working to turn around the California-based company after five straight quarters of declining sales and years of botched deals, management tumult and strategic mis-steps.
An $8.8bn (€6.6bn) writedown of the acquired software company Autonomy in November renewed calls on Wall Street for HP to realise shareholder value by shedding certain businesses, such as PCs and printers.
HP, which bought Autonomy for $10bn in 2011, took an $8.8bn charge to reflect that the UK company isn't worth what it paid.
HP says about $5bn of that charge stemmed from improper accounting. HP also faces shareholders' lawsuits related to the troubles at Autonomy.
Autonomy founder and former CEO Mike Lynch, an Irish technology entrepreneur, has said the allegations are false.
HP, the world's largest maker of personal computers and printers, discussed the evaluation in the 'Risk Factors' section of its regulatory filing, saying that any disposal would have possible drawbacks.
"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," HP said.
The company also said in the filing that the US Justice Department had opened an investigation relating to Autonomy.
HP accused the software company of misrepresenting its performance before it was bought in 2011.
The disclosure that HP is evaluating disposing of assets or businesses came 14 months after Ms Whitman said she would keep the company's PC business in-house.
Her predecessor, Leo Apotheker, had explored a spinoff of the unit, which had $35.7bn in sales in fiscal 2012, or 29pc of the total.
Ms Whitman instead unified the PC and printer groups' management under executive vice president Todd Bradley last year.
The printer unit accounted for $24.5bn in fiscal 2012 revenue, or 20pc of total sales.
Michael Thacker, a spokes-man for the company, declined to comment beyond the filing.
HP's filing said it may "dispose of a business at a price or on terms that are less desirable than we had anticipated".
In addition, "the impact of the divestiture on our revenue growth may be larger than projected", according to the filing.
Shares of HP gained 4.2pc to $14.25 at Monday's close in New York. The shares declined 45pc in 2012. (Bloomberg)