Hewlett-Packard’s PC Unit May Lure Lenovo, Samsung Electronics as Suitors
By Naoko Fujimura, Jun Yang and Edmond Lococo - Aug 19, 2011 5:30 AM ET Fri Aug 19 09:30:15 GMT 2011
Hewlett-Packard’s PC Unit May Lure Lenovo, Samsung Bidders 
Nelson Ching/Bloomberg
For Lenovo, the world’s third-largest PC vendor, buying the Hewlett-Packard unit would help the company more than double its share of global sales and vault past Dell, the No. 2 producer.
For Lenovo, the world’s third-largest PC vendor, buying the Hewlett-Packard unit would help the company more than double its share of global sales and vault past Dell, the No. 2 producer. Photographer: Nelson Ching/Bloomberg
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Aug. 18 (Bloomberg) -- Bill Kreher, analyst with Edward Jones & Co., talks about Hewlett-Packard Co.'s planned overhaul of its businesses, including an agreement to buy Autonomy Corp. for $10.3 billion and consideration of a breakup that would unravel the much-debated Compaq Computer Corp. purchase. Kreher speaks with Jon Erlichman on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
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Hewlett-Packard’s PC Unit May Lure Lenovo, Samsung Bidders 
David Paul Morris/Bloomberg
Hewlett-Packard said yesterday it may shed its personal-computer business unit as Chief Executive Officer Leo Apotheker plans to overhaul the 72-year-old company to focus more on software and enterprise.
Hewlett-Packard said yesterday it may shed its personal-computer business unit as Chief Executive Officer Leo Apotheker plans to overhaul the 72-year-old company to focus more on software and enterprise. Photographer: David Paul Morris/Bloomberg
Hewlett-Packard Co. (HPQ)’s plans to unload its personal-computer business, the world’s biggest, may attract China’s Lenovo Group Ltd. (992) and South Korea’s Samsung Electronics Co. as suitors, analysts said.
Lenovo, the Chinese company that bought International Business Machines Corp.’s PC business in 2005, would be a leading candidate, analysts at technology research firms Ovum Ltd. 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.
Hewlett-Packard said yesterday it may shed the unit as Chief Executive Officer Leo Apotheker plans to overhaul the 72- year-old company to focus more on software and enterprise customers. Credit Suisse Group AG estimates the division may be worth $12 billion, which may make a sale the PC industry’s biggest since Hewlett-Packard bought Compaq Computer Corp. in 2002, according to data compiled by Bloomberg.
“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.”
The Palo Alto, 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 Corp. for $10.3 billion. Dell Inc. (DELL), the second- largest PC maker, also is focusing more on services, though PCs still make up about half its sales.
Worldwide Leaders Jay Chen, a Lenovo spokesman in Beijing, declined to comment on whether his employer would be interested in the Hewlett-Packard business. James Chung, a Seoul-based spokesman for Samsung, declined to comment on whether the company could buy the business.
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 vendor, buying the Hewlett-Packard unit would help the company more than double its share of global sales and vault past Dell, the No. 2 producer. 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.”
U.S. Market Share
Based on second-quarter shipments estimates by research firm Gartner Inc., Lenovo’s market share would surge to 30 percent from 12 percent. That’s more than double the 13 percent share held by No. 2 producer Dell and No. 4 Acer’s 11 percent.
A purchase may also help the Chinese company in overseas markets, Tseng said. The maker of ThinkPad laptops, which gets 48 percent of its revenue at home, isn’t even among the top five sellers in the U.S., according to estimates at Gartner.
Acquiring the Hewlett-Packard unit would help Samsung, the world’s largest maker of memory chips, televisions and displays, extend its lead as the biggest electronics manufacturer by revenue. Suwon, South Korea-based Samsung aims to raise laptop computer sales by 80 percent this year as it rolls out new high- end models, the company said in February.
WebOS Attraction Not everyone expects Samsung to be in the mix. Mark Newman, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said Samsung may rather be interested in Hewlett-Packard’s WebOS than the PC business as the Korean company competes against Apple Inc. (AAPL) in smartphones and tablets.
“They’re definitely interested in PC, but there’s little to gain from buying a PC hardware business,” Newman said. “WebOS would be a good asset for them to own if they could.”
Google Inc., maker of the Android operating system, disclosed this week it agreed to buy Motorola Mobility Holdings Inc. for $12.5 billion as it seeks to forestall patent litigation and compete with Apple in the smartphone market.
Foxconn Technology Group, which makes PCs for Hewlett- Packard, and Taiwan’s Acer may be also interested in the Hewlett-Packard unit, Ovum’s Lusher said. Dell is unlikely to be interested because the company, like Hewlett-Packard, aims to reduce its reliance in PCs and focus more on software, services and cloud computing, Tseng said.
Edmund Ding, a spokesman for Foxconn’s flagship Hon Hai Precision Industry Co., didn’t answer calls to his mobile phone or e-mails. Henry Wang, a spokesman for Acer, said the company doesn’t comment on speculation.
Global personal-computer shipments in the second quarter rose less than forecast amid a sluggish economy and consumer preference for smartphones and Apple’s iPad media tablet, according to market-research firms.
Shipments climbed 2.6 percent, IDC said last month, shy of the 2.9 percent increase the researcher had forecast. Gartner said PC sales rose 2.3 percent from a year earlier, compared with the 6.7 percent gain the firm predicted.
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