HP rumored to be considering company "break up"

By on February 6, 2013, 3:00 PM

In 2011, former CEO Leo Apotheker proposed jettisoning HP's iconic PC business -- a division which suffers from notoriously anemic profit margins -- in an attempt to return HP to greater profitability. Although Apotheker's successor, Meg Whitman, canned that idea, unnamed sources "familiar with the matter" claim HP may once again be mulling over breaking the company apart. This time around though, it could be more than just its PC unit.

In December's 10-K SEC filing, HP stated (pdf) it had been considering the "disposition of assets and businesses that may no longer help us meet our objectives." Assuming HP's bottom line is one of those objectives, the company has likely had its corporate meat cleaver standing by for months. According to one of the report's sources though, HP wants to avoid further diverging the company's businesses; nonetheless, it appears the "break up" option remains on the table.

Last year, analysts projected that if HP were to cut up its business, some of its individual properties would be worth substantially more than the company as a whole, possibly valuing more than $25 per share. HP has been trading around $16-$17 in recent days.

HP announced last year it would slowly cut about 30,000 jobs during restructuring efforts which continue until 2014. This drastic measure was fueled in part by its acquisition of Autonomy which turned out to be a disastrously expensive $20 billion mistake.

Whitman warned in October that HP would be facing tough times in 2013. She referred to 2013 as a "fix and rebuild" year and warned that profits would fall way short of expectations. Investors rewarded Whitman's candor by fleeing the company -- HP's stock price hit a nine-year low that month.

User Comments: 4

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Guest said:

HP needs to be broken up and add EL in the middle. Aren't the to ones who mentioned they would steal Dell's customers? Well, I've had 2 HP's in 3 years and both have died. A DV9843 and A DV7 -6100 series.

Cota Cota said:

Awww bohoo, let me play you a song for you.

HP has been doing the same mistakes over and over and over, and yet they spec new results, that's called insanity, and I don't think no one would discuss the level of incompetence they had been going on.

Seems like almost all companies and consumers are in the turd train these days :\

9Nails, TechSpot Paladin, said:

I'm not really surprised. Their workstations are running on thin margins for profit, their laptops are of good workmanship at best, and their printers are reliable products but easily matched by other manufacturers. The only area that they're still excellent in is with their server line. (Which they took from Compaq / Digitial.)

Hmm, makes me wonder though... They're a good company on the whole. If they on the turn around their stocks might be low enough to buy now.

SalaSSin said:

Hmm, makes me wonder though... They're a good company on the whole. If they on the turn around their stocks might be low enough to buy now.

Sure, but what if they break up the company, and the stock you bought is for the now empty holding structure?

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