HP has made a stunning reversal and decided to keep its PC business - barely a month after ousting the CEO who announced plans to spin it off.
President and CEO Meg Whitman said the company had "objectively evaluated the strategic, financial and operational impact of spinning off" the Personal Systems Group (PSG), which had been announced by previous CEO Leo Apotheker in August.
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HP had decided after a strategic review 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."
The strategic review had revealed the extent of integration between PSG and other parts of HP across key operations such as supply chain, IT and procurement and detailed the significant extent to which PSG contributed to HP's solutions portfolio and overall brand value. The cost to recreate these in a standalone company outweighed any benefits of separation.
Observers might wonder why HP made the decision to spin off PSG without conducting such a detailed analysis beforehand. As for partners, they are likely to rue the wasted couple of months they have had to endure and the damage that could have been done to relationships in the meantime. The onus is now on HP to recover any lost momentum in the PC market.
Paul Hunter, head of PSG in the UK and Ireland, said the decision to keep the division within HP was a "welcome one". He said the business had "undergone and robust, and at times very public, audit of the company which can only make us fitter and stronger".
Hunter claimed market share had "remained remarkably resilient" and the PSG business was in a "strong position and striving to increase the gap on our competition".