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Samsung seen as top contender for HP's computers

by Olaf de Senerpont Domis | Published August 24, 2011 at 5:06 PM

As the dust settles on Hewlett-Packard Co.'s announcement last week that it would consider a sale of its personal-computer business, speculation over who might take an interest in the unit continued to swirl Wednesday.

Samsung Electronics Co. Ltd. would make the most logical buyer for the business, given its global ambitions and large size, said Sterne, Agee & Leach Inc. analyst Shaw Wu. The South Korean electronics giant has been trying to build strength in PCs for years, but has only managed to eke out a 3% market share in the low-margin, highly competitive market, compared to HP's industry-leading 18%.

"Samsung has reason to be a big player in PCs given its vertical integration advantages being one of the top producers of key components including memory, displays, batteries, and NAND flash," Wu said in a research note Wednesday.

Adding to the potential attractiveness for Samsung of buying a piece of HP is WebOS, the mobile operating system that HP acquired when it absorbed Palm Inc. for $1.2 billion. With Google Inc.'s pending $12.5 billion agreement to acquire Motorola Mobility Holdings Inc., Samsung, like other phonemakers who use Google's Android mobile operating system, is likely to be seeking alternative cellphone software options.

All this said, there was a hitch to Wu's Samsung theory. Samsung issued this brief statement on its corporate blog Wednesday: "The recent rumors that Samsung Electronics will be taking over Hewlett-Packard Co.'s personal computer business are not true. We hope this clarifies any confusion that may have occurred."

Other potential buyers could be sniffing around the unit, which is worth roughly $8 billion, or about $3.66 per HP share, Wu said. Dell Inc., which holds second place in PC market share with 12.5%, according to research firm Gartner Inc., could take an interest, the analyst argued. The Round Rock, Texas-based computer maker in the second quarter moved into the second-place market share slot for the first time since the fourth quarter of 2008, thanks in large part to renewed buying in the professional market, Gartner reported recently.

Lenovo Group Ltd., which commanded a 12% share of the PC market at the end of the second quarter, and Acer Inc., which had nearly 11% market share, could also take an interest in HP's unit, Wu argued.

HP stunned the market Aug. 18 when it announced it was considering strategic options for its sprawling PC business, which represents about 30% of the company's overall revenue, in move to sharpen its focus on software and services. The Palo Alto, Calif.-based technology giant simultaneously announced a $10.8 billion agreement to acquire Autonomy Corp. plc, a U.K.-based maker of software that helps enterprise customers manage data.

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Samsung seen as top contender for HP's computers

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Olaf de Senerpont Domis

Bureau chief, West Coast; Editor, venture capital

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