Hewlett-Packard's annual 10-K filing with the Securities and Exchange Commission contains language that could be interpreted to mean it is considering selling off underperforming assets and business units.
In the "Risk Factors" section of the 10-K, released last Thursday, HP said it will "continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives." As Bloomberg noted earlier this week, HP did not include this statement in last year's 10-K.
"When we decide to sell assets or a business, 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," HP said in the 10-K. "We may also dispose of a business at a price or on terms that are less desirable than we had anticipated."
An HP spokesperson declined to comment on the significance of the new risk factors, which are listed alongside others such as "terrorist acts, conflicts, wars and geopolitical uncertainties," and potential difficulties HP could encounter in attracting and retaining top talent.
By spelling out risks associated with selling assets or business units, HP could be setting the stage for some major moves ahead, according to Patrick Moorhead, president and principal analyst at Moor Insights & Strategy.
"10-Ks are very vital tools for regulators, companies, and investors, in that they put everyone on notice that something is changing," Moorhead said in an email. "It is apparent that now, more than ever, HP is considering selling investments that either aren't as strategic as they once were or just aren't performing well."
What units and assets could HP look to sell? CEO Meg Whitman, as part of her "Better Together" campaign, has stressed the importance of keeping HP's component businesses united under a single corporate umbrella.
However, there is a different drumbeat coming from Wall Street, with many analysts downgrading HP shares and calling for the company to be broken up in order to separate its consumer and enterprise businesses. HP's decision to merge PCs and printers last March was supposed to yield long-term organizational and cost efficiencies, so HP is likely committed to following through with the integration of these businesses.
HP's Enterprise Services division could be a possible target for divestiture. HP shopped its Electronic Data Systems (EDS) business to private equity firms and other potential buyers last year, but was unable to find a buyer, CRN reported last September.
HP, which wrote down $8 billion from the $13.9 billion EDS deal in August, could fetch $5 billion for the unit, Brian Alexander, director of technology research at Raymond James & Associates, said in September.
PUBLISHED JAN. 2, 2013