09:03 AM Oct 28, 2011
SAN FRANCISCO – Hewlett-Packard ditched a plan to spin off its personal computers unit, a month after the ouster of CEO Leo Apotheker, whose idea would have cost billions of dollars in expenses and lost business.
New chief executive Meg Whitman, who replaced Mr Apotheker immediately, had vowed a quick decision on an issue that was beginning to alienate its PC partners, investors and customers.
Separating the PC unit would have cost the company US$1.5 billion (S$1.9 billion) in one-time expenses and another US$1 billion annually, it said.
The retention of the PC business marks the latest flip-flop in strategy as the company had said earlier that its preferred option was to spin out the business.
“This is the most pragmatic decision and allows them to continue to leverage the end-to-end supply chain benefits,” said Gartner analyst Mark Fabi, adding that it also showed Ms Whitman’s decisiveness as CEO.
“Clearly this was missing over the past year,” he added.
The world’s largest technology company by revenue stunned investors when it announced in August 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.
Citing deep integration of the PC group in HP’s supply chain and procurement, Ms Whitman said the company was “stronger” with the unit. REUTERS
Moving in the right direction
“HP is a world leader in the PC and technology market, it would be like killing the golden goose that helps you lay the golden egg by ditching your PC unit. To stay competitive HP needs to reinvest and stay relevant in this competitive global markets by concentrating more on the software side to create more innovative products.” – Contributed by Oogle.