October 28, 2011 – Hewlett-Packard will not be getting out of the personal computer business after all, according to an announcement from recently promoted HP CEO and President Meg Whitman.
In a statement following the internal evaluation of its Personal Systems Group (PSG), Whitman said PCs remain vital to HP’s strategy, finances and shareholders’ interests. That reverses earlier comments from Whitman and other HP executives of plans to spin off the PC division set in motion in mid-August by her predecessor, Leo Apotheker, who was ousted a month later.
“It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees. HP is committed to PSG, and together we are stronger,” Whitman said late Thursday.
According to a release from HP, the evaluation of the PC division over the last month revealed a deep integration with supply chain, IT and procurement entities within the world’s largest software vendor, and recreating those benefits and connections “outweighed any benefits in separation.” HP also found that the PC division remains a contributor to the vendor’s solutions portfolio and brand value.
The evaluation of the PC division was data driven and involved discussion with experts from “across businesses and functions,” according to a news release.
There had been grumblings from HP shareholders after the announced sale of the PC division, which is the world’s largest after HP acquired Compaq for $25 billion nine years ago. HP registered $40.7 billion in revenue from its PC division in 2010, according to company financial releases.
Todd Bradley, EVP of HP’s PSG, who had stated he intended to stay on as head of any new PC division, announced his intentions to advance innovations and customer advantages in the wake of the decision.
Mark A. Smith, analyst with Ventana Research group, said the announcement makes good strides toward stabilizing the consumer side of HP’s business, and making it a differentiator, particularly in the tight information management software and tech markets.
“The previous path [of HP] of focusing on enterprise software and technology is not a path that is easier for revenue growth and, in fact, is more difficult,” Smith says. “Competing against IBM and Oracle, let alone SAP, in this segment is not a place where HP has a history or assets to currently be successful.”
For a Webcast and official announcement on the release, click here.
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