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HP Announces Transformation, Lowers Outlook

August 23, 2011

HP released its financial results for its third fiscal quarter and also announced drastic new plans which sees the computing giant potentially spinning off its PC business and dropping its newly launched tablet line.

In a surprise move from the company, HP announced it will discontinue its newly launched webOS business, which is based, in-part, on its acquisition of Palm in 2010 for US$1.2 billion. The company is now looking for a buyer for the platform and is holding a fire sale on its TouchPad device, launched only six weeks ago. The company also announced plans to buy Cambridge-based Autonomy Corp., which is the second largest software developer in the UK for US$10.2 billion.

"We're focused on improving performance across the business," said Léo Apotheker, HP president and chief executive officer. "HP is taking bold, transformative steps to position the company as a leader in the evolving information economy. Today's announced plan will allow HP to drive creation of long-term shareholder value through a focus on fewer fronts, thereby improving its ability to execute, invest in innovation and drive a higher-margin business mix."

"Our outlook reflects the challenges that we face across our businesses," said Cathie Lesjak, HP executive vice president and chief financial officer. "Dealing with these challenges will take time, but HP will navigate through the transformation to become a more focused, streamlined company."

Imaging and Printing Group (IPG) revenue declined one percent year over year with a 14.7 percent operating margin. Commercial revenue was down seven percent year over year with commercial printer hardware units up one percent. Consumer printer hardware revenue was up one percent year over year on seven percent unit growth.

HP estimates full-year revenue will be approximately US$127.2 billion to US$127.6 billion, down from its previous estimate of US$129 billion to US$130 billion.

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