HP Strategist: PC business not for sale

By Steven Burke on Jan 11, 2013 5:53 AM
Filed under Cloud

But some assets will have to go.

HP's top strategist is reaffirming the company's commitment to the PC business in the wake of a 10K filing that stressed the need for non-performing assets to be culled if an effective turnaround is to be achieved.

"We are committed to the PC business," said HP chief strategy officer Mohamad Ali in an interview with CRN at the HP Engage road show in the US, when asked if statements in HP's recent 10-K filing with the Securities and Exchange Commission signals a renewed interest in selling off the PC business.

"[HP CEO] Meg [Whitman] has said this, and I am going to repeat that. The stuff that you see in the 10K is responsible stuff that any company should always be doing: looking at the things that fit, looking at the things that don't. But we have said repeatedly over the last year that we are absolutely committed to the PC business."

[Related: HP Strategist: CEO Whitman's Five-Year Commitment Is Key]

Ali, the former CEO of Aspect Software and a former IBM strategist who led the charge on a number of high-profile IBM acquisitions including Cognos, joined HP as top strategist just five months ago.

As part of its plans to get back on track, the company noted last month in the "Risk Factors" section of its 10-K that it will "continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives."

Furthermore, HP cautioned in the 10-K that it may "dispose of a business at a price or on terms that are less desirable than we had anticipated."

HP reported earnings before taxes of $US1.70 billion on sales of $US35.65 billion for its Personal Systems business for the fiscal year ended October 31, 2012. That compares with earnings before taxes of $US2.35 billion on sales of $US39.57 billion for the prior fiscal year.

HP first raised the possibility that it could sell off its PC business in August 2011 when it announced that its board of directors had "authorised 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."

The announcment was met by howls of protest from HP's channel as well as heavy criticism from analysts and even the company's own competitors. Two months later, after just two months at the helm, HP's Whitman killed the plan.

In fact, HP issued a statement at the time that its board of directors is "confident that PSG [Personal Systems Group] can drive profitable growth as part of the larger entity and accelerate solutions from other parts of HP’s business."

HP's Ali, for his part, said the technology innovation that the Printing and Personal Systems Group is providing the company is critical to an HP turnaround. He pointed to products like HP's new ElitePad 900 Windows 8 tablet, which is slated to ship later this month, and its OfficeJet Pro X series printers, which are slated to launch in the spring.

As for the ElitePad, Ali said it is the industry's first no-compromise business tablet. "It tackles a market that really isn't well served today," he said. "You have a consumer product that is trying to wedge itself in here." In 2011 HP's Touchpad tablet became one of the shortest-live products in tech history, dumped just six weeks after launch.

As for the OfficeJet Pro X series, which is aimed at providing laser jet printing quality at half the cost, Ali said that "to be able to run ink at 65 pages per minute and have it come out bright and at 50-percent reduction in cost -- that is huge innovation."

Summing up HP's strategy in one word, Ali said: "Innovation." He said "HP Invent" is back and the company is investing in revolutionary research and development initiatives as part of its drive to restore its position as a technology leader.

"In 1939, [HP founders William] Hewlett and [David] Packard built this audio oscillator, and they sold it to Disney, and it was used to make the movie Fantasia," said Ali. "There was no other audio oscillator on the planet quite like it to get the quality that was required for Fantasia. It was that kind of product innovation that created HP. And, it is that kind of product innovation that we need to build upon to take HP to the next level."

 
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