HP May Sell Units Not Meeting Targets

Bloomberg has zeroed in on a comment made by Hewlett-Packard within its December 27 10-K filing with the U.S. Securities and Exchange Commission. According to the filing, the company plans to "evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives." In other words, units of HP that aren't meeting targets could be dumped.

In the "Risk Factors" section of its regulatory filing, HP said that any disposal of an asset or business would have possible setbacks. "When we decide to sell, 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," the company said.

HP CEO Meg Whitman has been working to steer the company back in the right direction after five straight quarters of declining sales and "years of botched deals, management tumult and strategic missteps". The $8.8 billion writedown of Autonomy Corp. back in November also hasn't helped propel the company forward, pushing it into considering the sale of specific branches to bring value back to its stock.

"[The Company] may dispose of a business at a price or on terms that are less desirable than we had anticipated," HP said in the filing. "The impact of the divestiture on our revenue growth may be larger than projected."

The first arm supposedly on the chopping block is HP's Printing and Personal Systems Group. This was formed in March 2012 by combining the Imaging and Printing Group (IPG) and its Personal Systems Group (PSG). Headed by Todd Bradley, the executive vice president of PSG since 2005, this merging of two units was expected to drive profitable growth.

But according to Bloomberg, the company's PC business earned $35.7 billion in sales in fiscal 2012, or 29-percent of HP's overall sales. The printer business only earned $24.5 billion during fiscal 2012, or 20-percent of the company's total sales. Even more, HP shares declined a whopping 45-percent in 2012 although they gained 4.2-percent to $14.25 at yesterday’s close in New York.

Also in the December 27 filing, HP said that the U.S. Justice Department had opened an investigation into Autonomy. HP said that the software company misrepresented its overall performance before HP's acquisition in 2011.

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