HP Thinks Separate PC Firm Better Strategy Over Sale

Posted by at 9:35 pm on August 29, 2011

HP in a statement Reuters said its possible separation of its PC business would more likely involve a spinoff than a sale to someone else. A representative said that HP had theorized a truly distinct company would be in the “best interests of HP’s shareholders, customers and employees.” The company still had to take the 12 to 18 months to explore the costs of such a move, including whether or not the offshoot would need to take on new staff with HP not providing some of the resources.

A more definitive view of the PC business’ fate was due by the end of the year, the company said.

HP made the revelation at the same time as it dropped webOS nearly two weeks ago as part of a broader shift away from hardware. Although HP still comfortably leads the PC industry in share, it has been losing share and shipments and seen its PC revenue decline. HP like other Windows PC designers has been in a race to the bottom for lower prices and has suffered as profit margins have given it little room for error. The officially acknowledged iPad effect, as well as strong competition from Apple’s Macs and a few fast-moving Windows competitors such as Lenovo, has seen HP struggle to keep its existing model afloat.

Many note that CEO Leo Apotheker, having come from SAP, is looking to transform HP into a services company like IBM. His decisions to kill webOS and get rid of the PC business have been interpreted by some as steps to effectively recreate SAP at his new employer.

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