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Technology / Networks

HP to retain PC division

Hewlett Packard (HP) has reversed its earlier decision made by its former chief executive Leo Apotheker that the company’s PC division, the personal systems group (PSG), will be sold off.

HP said in a statement that it has completed its evaluation of strategic alternatives for its PSG and has decided the unit will remain part of the company.

HP president and chief executive officer Meg Whitman said, "HP is committed to PSG, and together we are stronger."

"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," said Whitman, who was a board member before being selected as the CEO of the company after the board sacked Apotheker in September.

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Apotheker is the third CEO in a row to be fired by the board of the world’s largest computer maker by revenue. He had been facing turbulent times with criticisms coming from Wall Street, and shareholder lawsuits, over strategic decisions. During his 11 moths tenure, company shares tumbled over 45%. Apotheker had repeatedly slashed the company’s sales forecast.

On 18 August, Apotheker confounded investors by killing off a line of mobile devices including the TouchPad and announcing the discontinuation of its webOS hardware. HP’s $10bn deal to buy UK software house Autonomy had also been questioned by analysts who considered it too costly for HP. However, it is believed that his plan to spin off HP’s PC division, cost Apotheker his job.

On being appointed as the successor to Apotheker, Whitman, 55, had said that the company will continue to consider whether to sell or spin off the PC division. But the company has reversed the decision after a comprehensive review.

The company said that the strategic review involved subject matter experts from across the businesses and functions. It added, "The data-driven evaluation revealed the depth of the integration that has occurred across key operations such as supply chain, IT and procurement. It also detailed the significant extent to which PSG contributes 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."

PSG is the largest manufacturer of PCs in the world with revenues totalling $40.7bn for fiscal year 2010.

The company said that PSG is a key component of HP’s strategy to deliver higher value, lasting relationships with consumers, small- and medium-sized businesses and enterprise customers.

It added, "The HP board of directors is confident that PSG can drive profitable growth as part of the larger entity and accelerate solutions from other parts of HP’s business."

Whitman also revealed that the company will make tablet devices on the Windows 8 platform.

She told PaidContent, "I think we need to be in the tablet business, and we’re certainly going to be there with Windows 8."
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CBR Staff Writer

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