HP Would Be Foolish to Sell Off WebOS Gold

PALO ALTO, Calif. ( TheStreet) -- HP's ( HPQ) rumored plan to sell off its acclaimed WebOS software would be a foolish move for the tech giant, carving off some of the sexiest intellectual property in its portfolio.

Citing unnamed sources, Reuters reports that HP is looking to sell the WebOS software acquired as part of the firm's $1.2 billion purchase of Palm.

HP has yet to respond to TheStreet's request for comment on this story, although at least one analyst thinks that a WebOS sale would be a step in the wrong direction.

"The real opportunity is using this OS as an engine that drives printer interactions between various devices," explained Avi Cohen, managing partner at Avian Securities. "For example, to connect your camera to your printer -- this gives them a tool to do that."

HP pulled the plug on its WebOS-based hardware during the summer, but has described the software as being "strategically important" to the company.

While disappointing TouchPad tablet sales made relinquishing WebOS hardware seem like a relatively easy decision for HP, various options exist for the WebOS software, such as licensing it out.

"I think that the chances are that they just license it out, somehow look to leverage it," said Cohen, noting the software's strength in multitasking and video playback.

Keeping hold of WebOS would also strengthen HP's arm in the increasingly fierce tech patent wars, he added.

"You have got some IP protection with WebOS ," he told TheStreet. "So if HP wants to move in the handset and tablet direction again it gives them at least some IP protection against others."

HP has already said that it is confident of making money from WebOS, suggesting that licensing deals are likely.

Reuters, however, says that a sale could bring in "hundreds of millions" of dollars, but would not come close to the cost of the $1.2 billion Palm acquisition.

"You're not going to get that much money selling it," says Avian's Cohen. "It doesn't move the needle for HP -- it's not like it's going to make any difference on their cash balance sheet."

A host of big names, including Amazon ( AMZN), Research in Motion ( RIMM), IBM ( IBM), Oracle ( ORCL) and Intel ( INTC) are among the companies that could be interested in buying WebOS, according to Reuters. Oracle, Intel, RIM and IBM declined to comment on this story when contacted by TheStreet. Amazon has yet to respond to a request for comment on this story.

A WebOS sale to IBM, though, would be particularly bizarre given IBM's shift away from PCs and printers. Additionally, IBM already has a bewildering array of patents at its disposal. Big Blue, for example, received almost 6,000 patents in 2010 alone.

HP's new CEO Meg Whitman, who recently nixed a possible spinoff of the company's PC division, is also under pressure to crank up the company's innovation engine. While WebOS may not be a silver bullet for boosting HP's overall hardware, software and services businesses, the mobile operating system still offers some scope for linking gadgets and wowing consumers.

One major hurdle for HP, however, is luring application developers onto the WebOS platform, which faces fierce completion from Apple's ( AAPL) iOS and Google's ( GOOG) Android operating system.

Shares of HP dipped 25 cents, or 0.9%, to $27.63 on Tuesday.

-- Written by James Rogers in New York.

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