HP Says Prefers To Spin Off PC Unit

SAN FRANCISCO (Reuters) - Hewlett-Packard said on Monday it prefers to spin off its personal computers unit and is currently working on understanding the larger implications of separating the business from the company.

The world's largest technology company by revenue shocked investors when it announced earlier this month that it is considering strategic alternatives for its Personal Systems Group (PSG) -- which includes PCs -- and would kill its new tablet computer as part of a major revamping away from the consumer market.

"We prefer a spin-off as a separate company and the working hypotheses is that a spin-off will be in the best interests of HP's shareholders, customers and employees," a HP spokeswoman said. "However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG business from HP."

Some of the alternatives HP is exploring for the PC unit include hiving off the business into a separate company through a spin-off or sale.

HP said the whole process could take 12 months to 18 months, but a final decision on the unit is expected by the end of this calendar year.

The California-based company has been struggling in the PC market -- a low-margin but high revenue business -- as niftier gadgets such as Apple Inc's iPad have lured consumers away.

HP's WebOS-based TouchPad was killed after sales failed to take off. The company is now also exploring options for its WebOS software, which it acquired through the acquisition of Palm.

(Reporting by Poornima Gupta; Editing by Tim Dobbyn)

Copyright 2011 Thomson Reuters. Click for Restrictions

Comments

[pablitop]

08:25 PM on 08/30/2011

I was considering one of their laptops. Well, gotta go with some other manufacturer.

[DRaymond]

03:18 PM on 08/30/2011

The funny thing is that if they spin it off the new company will need a name that no longer includes HP in it.  The obvious choice is to just call it Compaq.  Just Compaq.  Like the merger never happened.

[Mister Grumpy]

01:32 PM on 08/30/2011

I would have thought the HP executives would have thought about the "implications" BEFORE making the decision............. guess not..........

[trumbull desi]

02:09 PM on 08/30/2011

Ya think? This is doing nothing but confusing their customers and pushing them into the arms of their competitors. And as one of their competitors, I'm might glad about such a silly decision.

[DRaymond]

03:01 PM on 08/30/2011

They have, that is mid-manager speak.  The boardroom makes the boardroom decision and then the mid-levels have to handle the details.

[RattleCat]

11:43 AM on 08/30/2011

One would be a fool to consider any HP consumer product during this era of turmoil and transition.  Except perhaps their printers - but given the price of ink refills, there are other reasons to pass on them.

[DRaymond]

03:02 PM on 08/30/2011

The imaging and printers group is not being spun off.

[any mouse]

11:24 AM on 08/30/2011

Spin off is the only option because there is no one that will buy it.

Since Personal Systems Group (PSG) is almost entirely a marketing company using an ODM model, it could be a successful business.

[DRaymond]

03:16 PM on 08/30/2011

Oh there are people that will buy it,  Samsung, Toshiba, etc. the question is whether they will pay enough.

And PSG is a successful business, it is a high volume low margin business in a market segment that is no longer expanding, but that is not the same as being unprofitable.

[any mouse]

05:13 AM on 08/31/2011

I doubt very much that Samsung, Toshiba or anyone else will follow in Carly's foolish footsteps and buy PSG when they can just wait for it to die on its own.

As I noted, PSG uses an ODM business model, so yes, it is profitable (very few real employees to pay for). So yes, it could stand on its own, especially if it could license either (or both) the HP and/or the Compaq brand.

PSG could do as well as Dell, Lenovo or any of several other "free standing" personal system brands, especially since PSG already has an extensive distribution network.

The big question would be if the current management of PSG is up to the task. Based on the gross errors they have made lately (the pad, buying Palm, etc) they may not be very good.

If HP spins it off, the shareholders should probably insist on a complete new management and that HP should absorb all the costs of Palm and the defunct product lines.

[perturbedintexas]

11:24 AM on 08/30/2011

HP & Compaq computers are mfg. in the same factory in Juarez, Mexico that Dell computers are made. Different parts, same assembly line.

[paradoja]

10:42 AM on 08/30/2011

I feel a way about this... I have a thing for hp pcs

[Ignatius Jacques Reilly]

09:46 AM on 08/30/2011

HP is an out of date cash cow that should have been sold off, piece by piece, years ago.