HP’s 2013 Smartphone Plans: Start Thinking About One

Wow, what happened to Enterprise Services?

HP is going to have to sell something and raise some cash. On the one hand, PPS seem like a natural unit to sell off - after all, it's big enough to be a Fortune 50 company - but that doesn't align with a mobile device investment.  And if printers can really return 5 to 8 cents in revenue in 2013, how can they afford to lose that?

The bigger problem of course is that HP doesn't today own any of the control points of mobile devices - the OS (iOS/Android/Win8), or content (iTunes,Amazon,media group).  Even if HP retreats to enterprise, I don't see how a pure hardware play can be a major money maker.

2012 will be the year of selling off PPS. Some investor in China will love to have a $65 billion business to run.

From http://allthingsd.com/20121003/liveblogging-meg-whitmans-remarks-from-the-hp-analysts-meeting/

Lesjak: FY 2013 outlook: Non-GAAP EPS $3.40-$3.60.

There goes the $4 that analysts had been looking for.

This is based on an assumption that Enterprise Services Business Revenue will decline 11 percent to 13 percent across the company. With operating margins of zero to 3 percent. That's pretty huge.

From http://allthingsd.com/20121004/hps-2013-smartphone-plans-start-thinking-about-one/

" "We don't have any plans to introduce a smartphone in 2013," Whitman said during HP's analyst day on Wednesday. "But we've got to begin thinking about our play here. How do we capture this segment of the personal computing market? … I believe that, five years from now, if we don't have a smartphone — or whatever the next generation of that device is — we'll be locked out of a huge segment of the population in many countries."

Tough to disagree with that assessment, given the soaring smartphone market and the dawning of the "post-PC" era.

But it's also hard not to wince at the idea of HP taking another run at the smartphone and tablet market after a failed first attempt that ended in embarrassment and more than $3.3 billion in goodwill- and inventory write-offs. As Jefferies analyst Peter Misek said, following Whitman's first smartphone comments, "While [it] makes sense strategically, we see it as a high risk move. On top of adding costs and working capital burdens to an already stressed balance sheet, there could be additional write-offs. We note that to date almost all PC OEMs have failed to gain significant traction in consumer tablets/smartphones." "