Hewlett-Packard
will keep its Personal Systems Group, reversing a decision that would have
potentially spun off HP’s profitable PC-manufacturing division.
“HP
objectively evaluated the strategic, financial and operational impact of
spinning off PSG,” Meg Whitman, HP’s CEO and president, wrote in an Oct. 27 statement.
“It’s clear after our analysis that keeping PSG within HP is right for
customers and partners, right for shareholders, and right for employees.”
In an Oct. 27
conference call, she told media and analysts that HP's previous decision had
"confused the market pretty dramatically" but that the company was
moving to eliminate that uncertainty. "We're going to fight for every
order," she said, alluding to PSG sales.
An HP
“data-driven evaluation” revealed PSG as not only deeply baked into all of HP’s
lines of business (including supply chain, IT and procurement), but also a
significant contributor to overall brand value—too valuable, apparently, to
divest and recreate as a standalone company, according to the tech giant.
In essence,
HP’s decision to keep PSG is a partial refutation of the company’s abrupt
about-face earlier this year, one that saw the company kill its webOS-powered
TouchPad tablet, announce plans to either partially or fully divest itself of
PSG, and move to position itself first and foremost as a software-and-services
concern. That strategy, established by ex-CEO Leo Apotheker, was met with shock
and mixed reviews by pundits and analysts.
Apotheker, who
had come to HP from German enterprise-software maker SAP, had advocated
software and services as the way forward. He also argued that low margins and
slower sales made the PC business a less attractive proposition. But as
criticism continued and HP’s stock plunged, the company's embattled board
forced him out of the CEO seat Sept.
22 and appointed former eBay CEO and one-time California gubernatorial candidate
Meg Whitman in his place.
Whitman
previously sat on HP’s board of directors. Soon after taking her new position,
she worked to reassure investors and employees of HP’s continued viability
after two CEO shake-ups in less than two years. She also indicated that a
decision about HP’s PC business would be made by the end of October.
“It’s a decision
I want to make much faster than my predecessor,” she told a conference Oct. 4,
according to Bloomberg
BusinessWeek.
Despite
terminating its tablet plans, HP claimed it would potentially license webOS to
other companies. Any company that takes webOS off HP’s hands would likely
acquire a host of patents useful in the increasingly litigious mobility space.
During the Oct.
27 conference call, Whitman suggested that a decision on webOS software would
be coming soon. "I think we need to be in the tablet business," she
said. "We're certainly going to be there with Windows 8, and we're going
to make a long-term decision about webOS."
Now that
Whitman has settled the awkward question of what HP will do with one of its
signature divisions, her next big step is ensuring the company’s stockholders
and financial analysts that HP is back on track and ready to put the last year
of uncertainty behind. That will happen on Nov. 21, when HP details its
financial fourth-quarter earnings.
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