HP mulls PC division future as it buys Autonomy

Vendor ponders PSG spin-off as it looks to future growth strategy

HP is considering the spin-off of its PSG division, it has emerged, with the possibility of a sale being mooted.

The news coincided with a busy evening for the vendor as news surfaced that it was to buy UK software firm Autonomy for an estimated $10bn (£6bn).

If a spin-off goes ahead, it will be the biggest since IBM sold its PC division to Lenovo in 2005.

Gartner's latest PC market report revealed HP had reclaimed the top spot in EMEA from Acer after its rival experienced oversupply problems.

In a release issued this evening, the vendor said it was implementing a plan to transform the company and that the "exploration of an alternative" for PSG will help it "accomplish its strategic goals and pursue profitable growth".

Leo Apotheker, chief executive of HP (pictured), said: "The exploration of alternatives for PSG demonstrates our commitment to enhancing shareholder value and sharpening our strategic and financial focus. In March we outlined a strategy for HP, built on cloud solutions, to address the changing requirements of our customers, shaped heavily by secular market trends that are redefining how technology is consumed and deployed.

"Since then, we have observed the acceleration of these market trends which has led us to evaluate additional steps to transform HP to meet emerging opportunities. We believe the acquisition of Autonomy, combined with the exploration of alternatives for PSG, would allow HP to more effectively compete and better execute its focused strategy."

HP said its PSG division had an annual turnover of $41bn in fiscal year 2010.

"We believe exploring alternatives for PSG could enhance its performance, allow it to more effectively compete and provide greater value for its shareholders. PSG is a world-class-scale business with a leading market share position, a highly effective supply chain and broad reach and go-to-market capabilities. We believe there are alternatives that could afford PSG more autonomy and flexibility to make strategic investment decisions to better position the business for its customers, partners and employees," he added.

The vendor said the spin-off process could be completed within 12 to 18 months, but in the meantime the management, together with financial and legal advisers, will explore "strategic alternatives".