HP may sell PC business

HP's plans to unload its personal computer business may attract China's Lenovo and South Korea's Samsung as suitors, analysts said.

HP said yesterday it may shed the unit as chief executive Leo Apotheker plans to overhaul the 72- year-old company to focus more on software and enterprise customers.

The California-based company said yesterday it plans to separate its PC division within 18 months, discontinue making products that run WebOS software and purchase software-maker Autonomy for $10.3 billion. Dell, the second-largest PC maker, also is focusing more on services, though PCs still make up about half its sales.

Credit Suisse Group AG estimates the HP division may be worth $12 billion, which may make a sale the PC industry's biggest since Hewlett-Packard bought Compaq in 2002, according to data compiled by Bloomberg.

Lenovo, which bought IBM's PC business in 2005, would be a leading candidate, analysts at technology research firms Ovum and IDC said. Samsung may also be interested because the purchase may complement its geographic and product mix, said Carter Lusher, a researcher at Ovum.

"The PC business is still going to be a huge business with great opportunities for a company that can manage it correctly," Lusher said in a telephone interview. "The tablets are hot new flavors, but remember hundreds of millions of PCs are sold every year."

Samsung and Lenovo may pursue a purchase "to establish themselves as worldwide leaders," IDC said in a report today. "Both companies have aggressive growth plans and, if executed, would instantly reset the entire PC world".

For Lenovo, the world's third-largest PC seller, buying the HP unit would help the company more than double its share of global sales and vault past Dell. A purchase may also help the company benefit from the lower costs associated with economies of scale, said Steven Tseng, a Hong Kong-based analyst with Samsung Securities Co.

"In a mature business, volume is everything," Tseng said. "From Lenovo's perspective then, why not buy the brand and expand market share? If they were to acquire HP, the difference with other competitors would become huge."

Based on second-quarter shipments estimates by research firm Gartner, Lenovo's market share would surge to 30 per cent from 12 per cent. That's more than double the 13 per cent share held by Dell and Acer's 11 per cent.

Bloomberg