HP Might Spin-off of Personal Computer Business

Hewlett-Packard announced on August 18 that it is considering spinning off its personal computer business and is in talks to buy British enterprise software firm Autonomy Corp. The Palo Alto, Calif.-based HP, the world's largest maker of personal computers, also said that it is discontinuing its TouchPad tablet computer and its webOS smartphones.

Trading in HP was suspended on Wall Street as the firm published quarterly earnings ahead of schedule and made the block-buster announcements. HP shares were trading at $30.42 when trading was suspended around 3:05 pm (1905 GMT), down 3.1% from their closing level on August 17.

HP said it was looking at "strategic alternatives" for its Personal Systems Group (PSG), which makes desktop, laptop and other personal computers."HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.

HP's low-margin PC business has been the subject of separation rumors for months and HP shares have slumped this year amid investor concerns that the company is being overtaken by younger, nimbler rivals.

HP said it was discontinuing the TouchPad, its iPad rival, and smartphones using the webOS mobile operating system HP acquired from Palm in a $1.2 billion deal last year. "HP will continue to explore options to optimize the value of webOS software going forward," HP said.

HP also confirmed media reports that it is holding talks with Autonomy regarding a possible offer for the company. Financial news agency Bloomberg and The Wall Street Journal said HP was looking to acquire Autonomy for around $10 billion. Autonomy, which was founded in 1996 and has offices in Cambridge, England, and in San Francisco, makes software for companies to search and manage huge databases.

HP chief executive Leo Apotheker, a veteran of business software giant SAP, took over HP in November and has said he plans to refocus the company on software and make a major push into cloud services -- offering applications and storing data over the Internet.