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HP Staying in the PC Business After All
HP Staying in the PC Business After All
By Barry Levine / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
OCTOBER
28
2011
Hewlett-Packard is staying in the PC business. That's the decision from new CEO Meg Whitman, who says she is keeping that division as part of the company. In August, the previous CEO, Leo Apotheker, had announced H-P was evaluating possibly selling or spinning off its PC division.

The HP Personal Systems Group generated almost a third of the company's $126 billion in revenue last fiscal year. Whitman told The New York Times: "First and foremost, HP is a hardware company. We want to build out our software, but I don't think we are done yet on hardware."

$40.7 Billion in 2010

In a statement, the company said it had "completed its evaluation of strategic alternatives to its Personal Systems Group" and had decided to keep it.

H-P said its evaluation had involved subject-matter experts across the company's businesses and functions, which had revealed "the depth of the integration" of PSG in the supply chain, IT, and procurement, as well as the "significant extent" to which the unit contributes to HP's solutions portfolio and overall brand. The evaluation also showed that the cost to spin it off outweighed the benefits.

Some of those assessed benefits, according to news reports, include maintaining a diverse line of products, getting better deals on components and remaining a major hardware company. Whitman has also said that spinning off the PC unit would have meant a charge of $1.5 billion in one-time expenses and $1 billion annually in ongoing costs for maintaining similar functions, not to mention that the spun-off or sold company could have become a competitor for H-P's remaining products.

The announcement by Apotheker had taken the computer industry by surprise, particularly because H-P is the top manufacturer of personal computers in the world, with revenue of $40.7 billion in 2010. Apotheker was ousted as CEO in September, and replaced on Sept. 22 by former eBay CEO Whitman. This is her first major, announced decision.

'A Roller-Coaster Ride'

Michael Gartenberg, research director at Relevant Products/Services, said the on-again, off-again decision about the PC unit "has been a bit of a roller-coaster ride" for the company, especially as many outside observers believed H-P should remain in that business.

He added that Apotheker's announcement had seemed "too hasty," in that he announced they were planning to get rid of the PC division, but did not announce any plans about what was going to happen to it.

The decision to keep the PC unit, Gartenberg said, raises a question about whether the company will also decide to keep its webOS operating system. Not long after the launch of its webOS-based tablet, the TouchPad, H-P had said it would stop making that tablet and would largely abandon the OS.

In a call with analysts Thursday, Whitman said the company would build tablets running Microsoft's coming Windows 8 operating system, and that those tablets would become available next year. The company said it never intended to give up on Windows tablets.

Company officials indicated the webOS decision could be revisited, as well, within the next few months.

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