by Anton Shilov
02/05/2013 | 10:56 PM
Meg Whitman, chief executive officer of Hewlett-Packard, managed to save HP’s personal computer division from spinning-off in 2011, but at present the board of directors is reportedly studying a break-up of the U.S. tech company among several options the directors are considering to obtain maximum value for shareholders.
The HP directors have discussed the specifics of a possible breakup scenario, but also the merits of the company staying whole, since a recovery looks to be gradually taking hold, reports Qz.com web-site. There is no explicit pressure to break up HP as it seems that the company will be able to recover from its latest troubles. But the debates among board members come amid dissatisfaction of HP shareholders who feel the company is worth much more than its current market cap is.
HP itself recently also fueled rumours about potential plans to spin-off underperforming divisions after it added a clause into its filing with the U.S. securities and exchange commission (SEC) saying that the company continues “to evaluate the potential disposition of assets and businesses that may no longer help” HP to meet its objectives. The company further warned that it may “dispose of a business at a price or on terms that are less desirable than” it had anticipated.
In mid-January analysts from Moody’s slammed HP for underinvesting into research and development (R&D). Moody’s analyzed each of HP’s business units and compared its R&D spending to dedicated companies in the appropriate market segments, including Lexmark (printing), EMC (storage), Accenture (services) and Cisco Systems (networking). The company attempted to find out revenue share that HP needed to spend on research and development for each of its business units. The analysts from Moody’s concluded that HP’s actual R&D last fiscal year of $3.399 billion was short about a billion dollars compared to the implicit appropriate R&D run rate.
After a group of investors agreed to acquire all of the outstanding share for $24.4 billion with a premium of approximately 37% over the average closing share price during the previous 90 calendar days ending January 11, 2013, the situation got even harder for HP’s board and investors.
HP did not comment on the news-story.