A restructured Hewlett-Packard will still face many challenges

Hewlett-Packard (HPQ) would be a abate and radically altered aggregation if it goes advanced with affairs to unload its $41 billion claimed computer business. But it would still face abounding of the challenges it has struggled with this year.

While PCs accept been a axial focus of the aggregation for a decade, HP is a bazaar baton in several added sectors, including printers and computer servers. But industry experts say that anniversary of HP’s business segments is beneath bread-and-butter pressure, and there are hurdles to ramping up antagonism with Oracle (ORCL) and IBM incomputer application and technology services, two areas at the affection of CEO Léo Apotheker’s action for the future.

“They’re apparently several years abaft the curve,” said Patrick Sayers, a adviser and adept analyst afterward the casework industry, who acclaimed that IBM awash its PC business seven years ago as allotment of its own accomplishment to focus oncomputer application and services.

Apotheker and lath administrator Ray Lane began affair with above investors this anniversary to avert and explain the beauteous moves the Palo Alto-based aggregation appear aftermost Thursday. HP’s banal rose hardly

this anniversary afterwards falling about 25 percent on Thursday and Friday.

Citing a clasp on profits and added antagonism from Apple’s (AAPL) iPad and added PC alternatives, Apotheker said aftermost anniversary that HP will accede affairs or spinning off its PC analysis over the abutting 12 to 18 months. Apotheker additionally canceled the company’s brief TouchPad book and bargain the company’s full-year balance forecast, while acknowledging a cher $10 billioncomputer application accretion and allotment a fresh arch for HP’s casework business.

PC analysis arch Todd Bradley afterwards told CNBC the analysis of his operation may be completed in eight to 12 weeks. That implies a accommodation could be fabricated anon after, although it ability booty addition year to backpack out whatever change HP’s lath decides to make.

Analysts say there are few acceptable candidates to shop for the PC business. In a account Wednesday, South Korea’s Samsung appeared to abjure interest. HP admiral accept signaled they ability circuit the analysis off as a stand-alone company. Apotheker has said that would let the PC operation focus on developing fresh products, while HP concentrates on confined business customers.

The abrupt bead in HP’s banal price, meanwhile, prompted belief that archrival Oracle ability dive in to shop for the blow of the company. Such a accord would be costly, however, and abounding analysts appearance it as unlikely. An Oracle backer beneath comment.

Apotheker has corrective aftermost week’s announcements as allotment of broader action to focus on affairs added assisting tech articles and casework to accumulated and government clients. Abounding experts accede the aggregation could acquire college profits in those sectors, at a time back antagonism from lower-cost Asian manufacturers is blame bottomward margins on computer hardware.

While the PC analysis has been HP’s better antecedent of revenue, the division’s $9.6 billion in sales aftermost analysis was about akin by $9 billion in acquirement from the company’s consulting and tech casework division. By comparison, IBM had $15 billion in casework acquirement aftermost quarter.

All told, afterwards adding $40.7 billion in PC sales, HP still hauled in acquirement of $85 billion from its added segments aftermost year. That’s beneath than IBM’s acquirement of $99 billion aftermost year but essentially added than anniversary sales of added tech giants, such as Dell’s $61.5 billion, Cisco’s (CSCO) $40 billion or Oracle’s $35.6 billion.

An HP agent beneath to say how abounding bodies assignment in the PC group, which has offices in Cupertino but operations in added genitalia of the United States and overseas. Analysts appraisal up to 100,000, but their abandonment would still leave HP with one of the tech industry’s better payrolls, back its accepted all-around workforce is added than 324,000.

HP, meanwhile, said it will acquire $1 billion in restructuring costs accompanying to the company’s accommodation to stop authoritative tablets and phones based on the webOScomputer application acquired back HP bought Palm aftermost year. That’s acceptable to accommodate severance for abounding of the almost 900 Palm workers who abutting HP, although a agent said HP has not bent how abounding jobs will be affected.

At atomic on paper, divesting the PC business would accession HP’s all-embracing accumulation margin: The PC analysis had operating accumulation of 6 percent aftermost quarter, while every added analysis appear operating margins in the low to aerial teens.

But the PC business additionally boosts added segments of the company. HP’s printer and abstracts centermost capacity account from “bundled” affairs with accumulated barter who shop for an array of tech products, including PCs, and from aggregate discounts that HP negotiates with its suppliers for those products.

Each of HP’s actual businesses additionally has its own challenges. Apotheker has bargain the company’s anniversary balance anticipation in anniversary of the aftermost three quarters.

As with the PC sector, accumulation margins are shrinking in the server business, which is added bedeviled by lower-cost, article machines. Advance in the press business has slowed; experts say the acceptance of agenda media agency consumers and businesses will book alike beneath in the future.

Printing has been a above accumulation centermost for HP, abundantly because of aerial mark-ups on printer ink. Apotheker said HP has no affairs to dump the press group, although some analysts altercate the press and PC businesses are so carefully affiliated that they should go together.

In the casework business, meanwhile, Apotheker has said HP needs to advance added to aggrandize its ability and capabilities. He called above IBM controlling John Visentin to advance the division, afterward longtime controlling Ann Livermore’s move to the HP board.

Experts say appeal is slowing for the kinds of basal outsourcing operations that HP acquired back it bought Electronic Abstracts Systems for about $14 billion in 2008. Back it comes to added assisting affairs to advice corporations use technology to adapt their business, Sayers said HP lags abaft IBM and Accenture.

And admitting several contempo acquisitions, HP’scomputer application analysis is still its aboriginal business, with $780 actor in acquirement aftermost quarter. That’s up 20 percent from a year ago, and Apotheker has said the $10 billion acquirement of British software-maker Autonomy will drive added growth.

But it’s not an accessible assignment to assemblecomputer application from altered companies into a articular set of products. Both Oracle and IBM accept added acquaintance there. Ventana Research analyst Mark Smith said HP has struggled to accommodated goals for anothercomputer application acquisition, Vertica, afterwards abandoning an beforehand affairs aimed at a accompanying market.

“If they’re activity to attempt with IBM, Oracle and SAP, they’re activity to accept to do added acquisitions, they’ve got to accumulate theircomputer application portfolio and they’re activity to accept to accretion added assurance and believability with customers,” Smith said.

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