HP: We'll Keep Selling Computers

PALO ALTO, Calif. (AP) - Hewlett-Packard Co. said Thursday that it has decided against spinning off or selling its Personal Systems Group unit.

The PC manufacturer said that it reached its decision after evaluating the strategic, financial and operational impact of spinning off the business unit - the world's biggest manufacturer of desktop and notebook computers for consumers and businesses.

The unit supplies a third of HP's revenue, but is its least profitable division.

Hewlett-Packard President and CEO Meg Whitman said keeping the unit within the company is right for the company, its customers, shareholders and business partners.

Deciding what to do with the unit has been one of Whitman's biggest challenges since joining HP in September.

A month before her appointment as chief executive, former CEO Leo Apotheker said the PC business would go up for sale in a badly blundered announcement that hastened his demise.

Apotheker's disclosure likely devalued the unit in the eyes of potential buyers. Many analysts speculated that HP had no choice but to keep the business and work on repairing strained relationships with customers.

Carving out the business would have been a tricky kind of surgery, given its enormity. Steve Diamond, an associate professor at Santa Clara University School of Law, said "tearing apart a business unit of that size is like taking out organs."

"It's very painful. It's like dividing Siamese twins. It's very, very difficult to do and you don't know how it's going to come out," he said.

HP appears to have reached a similar conclusion.

The company said that its evaluation of the business unit revealed a deep integration across key operations, such as its supply chain and procurement. Ultimately, the review found that the cost to recreate these operations in a standalone company outweighed any benefits of selling the PC unit.

PCs are an area in which HP leads. But the company wanted to abandon the business because its profit margins are thin.

In the more profitable areas where HP needs to expand, it is playing catch-up. In technology services it has to contend with none other than market leader IBM Corp. HP's technology services division is one of several businesses that former CEO Apotheker identified as the victim of underinvestment.

Shares of Palo Alto, Calif.-based HP added $1.24, or 4.8 percent, to end regular trading at $26.99.PALO ALTO, Calif. (AP) - Hewlett-Packard Co. (HPQ) says it has decided against spinning off or selling its Personal Systems Group unit.

The PC manufacturer said Thursday that it reached its decision after evaluating the strategic, financial and operational impact of spinning off the business unit, which manufactures desktop and notebook computers for consumers and businesses.

Hewlett-Packard President and CEO Meg Whitman said keeping the unit within the company is right for the company, its customers, shareholders and business partners.

Shares of Palo Alto, Calif.-based HP added $1.24, or 4.8 percent, to end regular trading at $26.99.


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jtexaskansas

Apotheker lacks intelligence. Just how incompetent he is -- I don't think anyone knows. Good riddance.

October 28 2011 at 2:33 PM Report abuse rate up rate down Reply
Joel Kilgore

Time to give Lenovo a shot. HP's indecision is unsettling.

October 28 2011 at 12:59 AM Report abuse rate up rate down Reply
ottomanrx

Dan Sammartino for CEO !!!!!!!

October 28 2011 at 12:19 AM Report abuse rate up rate down Reply
donaldduckdotcom

I am delighted HP is keeping their pc business. I will buy a new one soon and I really wanted a new HP lap top they look great. Thanks for coming to your senses. I really felt left out on a limb when I heard they were giving up their computer unit. Take care of you customers HP and we will stay loyal customers.

October 27 2011 at 10:48 PM Report abuse rate up rate down Reply
leighannhancock

Love Love Love HP!! Owned many a PC and Laptop and the only one's that lasted were the HP's.
Getting the kids new laptops for Christmas, and have been comparison shopping online.
HP, by far, gives the most bang for the buck!
Awesome news.......... You go Meg! Watch her whip HP back to the top of their game.

October 27 2011 at 10:32 PM Report abuse rate up rate down Reply
Allen

I can understand why they thought about the sell after having a disastrous experience with HP Customer Service. It saddens me that I am now confused as to who to purchase my new PC from. I really wanted to keep the HP but now I'm worried after their customer service rep screwed up my order so bad that I just sent my comp back and cancelled the order a week after having it because the customer service rep had no clue what she was doing, or any of the 3 I spoke to for that matter. It was a simple exchange that went terribly wrong and now I am with out my ne computer and HP is without a new customer.

October 27 2011 at 9:38 PM Report abuse rate up rate down Reply
Denise

As far as I am concerned, HP (whether Hewlett Packard or Huffington Post) SUCKS. My experience in owning an HP unit resulted in them replacing my brand new unit twice (with refurbished ones). Needless to say, they do not get my or my family's business for computers, printers, etc.

October 27 2011 at 9:21 PM Report abuse rate up rate down Reply
Sandra

This is really good news! I have only HPs and they are very well built. Very few repairs and they are the best looking computers out there. I am so relieved. Thank you HP!

October 27 2011 at 7:50 PM Report abuse +1 rate up rate down Reply
Denis

Finally, a word of common sense from HP. Why would you get rid of the core business when you are the volume seller in the world?

October 27 2011 at 5:39 PM Report abuse +1 rate up rate down Reply
plaidp

Great decision. Don't really like Meg Whitman but this was the right thing to do. HP employees thought the split was crazy.

October 27 2011 at 5:31 PM Report abuse rate up rate down Reply