Hewlett-Packard Co. finally decided to spin off and sell their PC division — a plan first brought to light in August by the technology multinational’s now former CEO.
HP said Thursday that they have come to the decision after a long evaluation regarding the impact to the company of jettisoning the business unit considered the world’s biggest manufacturer of desktop and notebook computers for consumers and businesses.
The unit supplies a third of HP’s proceeds, and PCs are a region where the company is a market leader. However, it is HP’s least beneficial division, and its disposal destined to be part of former CEO Leo Apotheker‘s plan in transforming the Silicon Valley stalwart into a twin of East Coast rival IBM Corp.: a company concentrated on businesses, rather than both businesses and consumers.
According to HP’s new CEO Meg Whitman, the company now determined to give the lost revenue and cost.
For Whitman making a decision about the future of the unit is one of the biggest challenges that she faces.
Back in August, Apotheker said, the PC business would go up for sale in a badly bungled announcement, which hastened his demise. At that point, HP also believes that it would exit the tablet computer and smartphone business and purchase business software maker Autonomy Corp. for around $10 billion.
Inscribing the PC business would have been a hard surgery, given its sheer size. Steve Diamond, an associate professor at Santa Clara University School of Law, informed The Associated Press last month that tearing apart a business unit can be compared to taking out organs.
The company stated that its assessment of the business unit unveiled a deep assimilation across key operations, which include its supply chain and procurement. Ultimately, the review discovered that the cost of re-establishing these operations in a single company overshadowed any profits of separating the PC unit.
Some analysts applauded HP’s decision as the right move they also added that when Whitman made the announcement so hastily. She had beforehand said the company would make a willpower regarding the business by the end of the year.
Forrester Research analyst Frank Gillett thinks HP should not remove its PC unit.
Gillett said he believes HP may manage in thinning out its PC family — Just like what Steve Jobs did at Apple so that he could resuscitate the company in the ’90s — and concentrate just a few devices with appealing features.
As part of PC spinoff announcement, HP also mentioned that it not make any tablet computers and smartphones this October — effectively killing thrashing smartphone pioneer Palm Inc., which HP purchased in 2010 for $1.8 billion.