HP to keep PC business

Hewlett-Packard (HP) Thursday announced that it will keep its personal systems group (PSG) and continue to sell personal computers.

Last Updated: Oct 28, 2011, 12:10 PM IST

San Francisco: Hewlett-Packard (HP) Thursday announced that it will keep its personal systems group (PSG) and continue to sell personal computers.
"HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It`s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees," Meg Whitman, HP president and chief executive officer, said in a statement.

On Aug 18, former CEO Leo Apotheker said HP was considering to spin-off the PC business, which drove shares of the company to plunge 20 percent the following day, reported Xinhua.

HP then said its board of directors has authorised the exploration of strategic alternatives for the PSG, and it will consider a broad range of options that may include a full or partial separation of the PC business through a spin-off or other transaction.

According to HP, the review so far revealed the depth of the integration of its PC division that has occurred across the company`s key operations including supply chain and procurement.

In addition, it indicated that the division has made significant contributions to HP`s solutions portfolio and overall brand value.

"Finally, it also showed that the cost to recreate these in a standalone company outweighed any benefits of separation," HP said in a press release announcing the latest decision.

HP is now the world`s largest PC-maker with revenues of the PC division totaling $40.7 billion for fiscal year 2010, according to figures from the company.

A recent report from market research firm Gartner found that in the third quarter of 2011, HP`s PC shipments grew 5.3 percent year-on-year, faster than the industry average of 3.2 percent, and its share in global PC market actually increased slightly to 17.7 percent.

Though the PC division has a lower margin, the position and scale as the world`s No. 1 PC-vendor gives HP advantage to negotiate with other suppliers and helps its other businesses, analysts said.

The announcement to keep the PC unit is seen as the first major move of HP under new CEO Whitman, who took the job just over a month ago after replacing Apotheker Sep 22.

IANS