Is HP Thinking Outside the Box?

When Hewlett-Packard (NYSE: HPQ  ) tapped former SAP (NYSE: SAP  ) CEO Leo Apotheker to replace a disgraced Mark Hurd last year, we knew that HP wanted to grow its offerings in business services and enterprise software. Did anyone think that might shrink its footprint in hardware, too?

Taiwan's DigiTimes, citing a report from the Chinese-language Commercial Times, suggests that Samsung may be leading a pack of potential buyers for HP's computer hardware operations, with Lenovo and Chinese contract manufacturer Foxconn also in the running.

Lenovo makes sense; it swooped in when IBM (NYSE: IBM  ) wanted to ditch its laptop business several years ago. It's also easy to picture Samsung and Foxconn drooling all over their respective boardrooms. But why would HP dream of parting with a powerful subsidiary that ships tens of millions of computers a year?

DigiTimes' own sources claim that rumors of an HP hardware sale circulated among the Taiwanese IT community late last year, but that those negotiations fell apart.

The speculation seems a bit far-fetched, given Apotheker's admission this week that all HP computers will come with webOS pre-installed, along with Microsoft's (Nasdaq: MSFT  ) Windows. If HP is poised to shoehorn webOS into tens of millions of homes and cubicles, why would it abandon its best, most powerful means to do so?

HP could very well be brokering a deal with potential buyers to make sure that its webOS becomes standard bloatware for a set number of years, but that news that would only satisfy the cynics who decried HP's controversial, contested acquisition of Compaq years ago.

I fully understand that HP and Dell (Nasdaq: DELL  ) have been trying to buy their way into the higher-margin services side of the business. However, a lot of their gains in new markets directly result from their established reputation on the hardware end.

Don't do it, HP. You can still think outside of the box without getting out of the box business.

Do you think HP should sell its PC business? Share your thoughts in the comment box below, then add HP to your watchlist to track its next moves.

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Longtime Fool contributor Rick Munarriz pecked away this article on an HP computer, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On March 11, 2011, at 12:37 AM, Aviq25 wrote:

    HP PC division is out of touh with the changing market landscape. In Asia they continue to loose marketshare with local overpaid slow moving leaders sitting in their fiefdoms. HP is down in the fastest growing markets china, India & Indonesia. Hurd made some changes to the silo mindset but it is back.

    Selling PC division will truly spur it on the grwoth in services.....think IBM.

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