Updated: 4:45 p.m. ET, Tuesday, November 8
HP’s recent decision to keep its PC business going, reversing an earlier proposal to spin it off, apparently doesn’t apply to its recently “discontinued” WebOS mobile devices and software division.
A new report from Reuters on Monday night indicates that HP is taking WebOS, best known for powering the Palm-suite of devices (mobile organizers and phones), and putting it up for sale, less than two years after HP purchased the entire Palm company for $1.2 billion in what was considered by analysts to be a high-risk, low-return deal.
HP, for its part, is playing coy when it comes to the report. A spokesperson emailed TPM to say “We have said all along ‘we are exploring ways to optimize the webOS software.’ Nothing has changed.”
Interested companies reportedly include Amazon, Research In Motion (RIM), IBM, Oracle and Intel, each of which would have to find a creative way to integrate the WebOS software with radically disparate products and services.
The deal would apparently value WebOS at “hundreds of millions,” meaning that HP would take a big loss to get rid of the former Palm assets and products, including its dark horse tablet hit, the TouchPad, which moved off the shelves like molasses until HP slashed the price from an original $499 to $99 in August in the wake of its stunning announcement that it would “discontinue operations for webOS devices, specifically the TouchPad and webOS phones,” and “explore options to optimize the value of webOS software going forward.”
Thereafter, reports emerged that HP was moving quickly to fire WebOS engineers and shut down the entire division by November, yet company executive Todd Bradley vehemently denied that possibility as nothing more than an “unfounded rumor,” as late as October 31.
Still, it seems like a fairly reasonable proposition that HP could sell WebOS for a bargain bin price and do so quickly, given how fast its current board of directors moved to axe former HP CEO Leo Apotheker in September after barely a year at the helm of the company, replacing him with former EBay CEO and failed Republican California gubernatorial candidate Meg Whitman.
Also, HP’s board, which has been described as notoriously disorganized (“rife with animosities, suspicion, distrust, personal ambitions and jockeying for power that rendered it nearly dysfunctional,” is how James B. Stewart put it in The New York Times), is facing mounting pressure from disgruntled shareholders.
Many weren’t particularly happy with Apotheker’s decisions to sideline the PC and WebOS divisions while acquiring leading legal enterprise software company Autonomy at a cost of over $10 billion.
Aside from selling off $16 billion-worth of HP stock in the two days following the Autonomy purchase and WebOS discontinuation announcements, Bloomberg quoted one analyst who said that investor exasperation was the highest it had been recorded in 13 years of analysis.
But shareholders aren’t just putting implicit pressure on the company’s management and board: One shareholder in mid-September filed a proposed class action lawsuit against the company, alleging it mislead investors about the plans for WebOS and made false statements designed to inflate HP’s share price.
As for how shareholders are reacting to the recent report for HP’s WebOS sale: Shares were down slightly, -0.56 percent, at the time of this posting.
Meanwhile, tech writers and analysts are split on whether or not it would be a good decision for HP to sell the WebOS division off. There’s little question it would be good for the buyer, who would receive a boatload of mobile device patents with which to sue and/or defend against lawsuits from other major mobile device makers, namely Google and Apple.
Still, if there’s one thing that HP has proven capable of in recent history, it’s surprising everyone with 180-degree decisions. Stay tuned.
Late update: At The Verge, Joshua Topolsky reports that HP has scheduled an “all-hands” meeting has tonight at 4:30 ET, in which the fate of WebOS will be decided. We’ll update when we hear word from that.