Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Hewlett-Packard Says Goodbye to PCs, webOS

Hewlett-Packard confirmed today that it is “exploring strategic alternatives for its personal systems group,” including a possible sale or spinoff of the unit as an independent company.

It also said that it is engaged in talks with the British software concern Autonomy. Bloomberg News reported earlier today that HP was in talks to acquire Autonomy for about $10 billion, which would make it HP’s third-largest acquisition ever, after Compaq in 2001 ($32 billion) and EDS in 2008 (about $16 billion).

In addition, HP said it would discontinue operations of the webOS unit that came with last year’s acquisition of Palm, the handheld computing company for which it paid nearly $2 billion. Ina Fried has more about that here, but obviously the revelation that the TouchPad tablet device isn’t selling at Best Buy was an important indication that the webOS business was not long for this world.

The news came along with quarterly results that missed the consensus expectations of analysts. Revenue was $31.2 billion versus a consensus of $31.19 billion. Per-share earnings were $1.10, a penny short better than the consensus of $1.09. While HP managed to squeak by expectations on the earnings front, its outlook isn’t getting any better. It reduced its revenue forecast for the year to a range of $127.2 billion to $127.6 billion, down from its previously guided range of $129 billion to $130 billion. It also cut its estimated per-share earnings for the full year to a range of $4.82 to $4.86, down from $5. HP shares set new 52-week lows today, finally settling at $29.51, down 6 percent. The shares have lost nearly 30 percent since the start of the year, and are down more than 40 percent from their 52-week high set in February.

Update: In the sudden onslaught of HP news I misread the press release and said that HP missed the consensus by a penny per share when in fact it beat the consensus by a penny per share. Sorry about that.

A second update: Now HP has confirmed the terms of the Autonomy acquisition. HP has reached a deal to pay $42.11 a share for Autonomy in cash. The deal represents a premium of about 64 percent from Autonomy’s closing price yesterday. The deal will close by the end of the year.

And if that weren’t enough HP news for you, the company named John Visentin as executive vice president of HP Enterprise Services, effective immediately. Visentin previously led HP Enterprise Services for the Americas. Prior to joining HP, Visentin held several senior executive positions at IBM and, all told, has 27 years in the information technology industry. He replaces Tom Iannotti, who announced his retirement earlier this year.

Here’s the announcement. I’ll have more as I go through everything.

HP Confirms Discussions with Autonomy Corporation plc Regarding Possible Business Combination; Makes Other Announcements

Press Release Source: HP On Thursday August 18, 2011, 3:02 pm

PALO ALTO, Calif.–(BUSINESS WIRE)– HP (NYSE:HPQ – News) today commented on the recent announcement by Autonomy Corporation plc (LSE:AU.L.l – News). HP confirms that it is in discussions with Autonomy regarding a possible offer for the company.

HP also reported that it plans to announce that its board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG). 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.

In addition, HP reported that it plans to announce that it will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. HP will continue to explore options to optimize the value of webOS software going forward.

HP today announced preliminary results for the third fiscal quarter 2011, with revenue of $31.2 billion compared with $30.7 billion one year ago.

In the third quarter, preliminary GAAP diluted earnings per share (EPS) was $0.93 and non-GAAP diluted EPS was $1.10, compared with third quarter fiscal 2010 GAAP diluted EPS of $0.75 and non-GAAP diluted EPS of $1.08. Non-GAAP diluted EPS estimates exclude after-tax costs related primarily to the amortization of purchased intangible assets of approximately $0.17 per share and $0.33 per share in the third quarter of fiscal 2011 and fiscal 2010, respectively.

For the fourth fiscal quarter of 2011, HP estimates revenue of approximately $32.1 billion to $32.5 billion, GAAP diluted EPS in the range of $0.44 to $0.55, and non-GAAP diluted EPS in the range of $1.12 to $1.16. Non-GAAP diluted EPS guidance excludes after-tax costs of approximately $0.61 to $0.68 per share, related primarily to restructuring and shutdown costs associated with webOS devices, the amortization and impairment of purchased intangibles, restructuring charges and acquisition-related charges.

HP estimates full-year FY11 revenue will be approximately $127.2 billion to $127.6 billion, down from its previous estimate of $129 billion to $130 billion. FY11 GAAP diluted EPS is expected to be in the range of $3.59 to $3.70, down from its previous estimate of at least $4.27, and FY11 non-GAAP diluted EPS is expected to be in the range of $4.82 to $4.86, down from its previous estimate of at least $5.00. FY11 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $1.16 to 1.23 per share, related primarily to restructuring and shutdown costs associated with webOS devices, the amortization and impairment of purchased intangibles, restructuring charges and acquisition-related charges.

HP will host a conference call with the financial community today at 2 p.m. PT / 5 p.m. ET to discuss these announcements well as HP’s third quarter 2011 financial results. The call is accessible via an audio webcast at www.hp.com/investor/2011q3webcast.

About HP

HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure at the convergence of the cloud and connectivity, creating seamless, secure, context-aware experiences for a connected world. More information about HP is available at http://www.hp.com.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik