Print 9 comment(s) - last by WackyDan.. on Aug 30 at 11:21 PM

HP can't find an attractive buyer for the Personal Systems Group -- its consumer PC unit, so it seems resigned to spin it off.  (Source: SwissPac)

PSG Chief Tom Bradley hopes to be CEO of the spinoff company.  (Source: HP)
Move would make PSG (Personal System Group) the largest seller of PCs in the world

Hewlett-Packard Comp. (HPQ) is still the number one supplier of personal computers, but its moves in recent weeks have baffled many.  It killed its first webOS tablet two weeks ago, after only giving the device six weeks to prove itself on the market.  At the same time, it announced that it would be looking to get rid of its consumer personal computer business.

HP wrote:

HP also reported that it plans to announce that its board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG). HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.

The PSG is HP's unit responsible for making consumer PCs.  Apparently the "other transaction" is more or less off the table, according to PSG head Todd Bradley, who spoke with Reuters in an interview.  HP now seems to have its mind set on a spin-off.

Mr. Bradley states, "A standalone company could and will do what's most required to drive value for shareholders and partners."

He says that "the numbers don't support" a sale.  In other words, HP might want to sell the PSG to somebody, but no major manufacturer has the cash to stomach the $10-12B USD cost of the unit.  Taiwan's ASUSTEK Computer, Inc. (TPE:2357) and Acer Inc. (TPE:2353) -- two prospective buyers don't have the cash.  Nor does Hong Kong-based Lenovo Group, Ltd. (HKG: 0992), which has $3.8B USD cash on hand and would have to relying on a heavily stock-based purchase should it make an offer.

For now, Mr. Bradley is soldiering along like business as usual.  He comments, "[R]egardless of what happens, we're the largest PC company in the world. We need everybody energized, and while this isn't business as usual, we need people to go out and sell products every day."

He's currently on an Asian trip to strengthen the PSG's Chinese manufacturing capabilities.  The PSG plans to increase investments in China, consolidating its six local employee sites into a single large campus, located near Shanghai, which it will make its regional headquarters.  It also plans on expanding its manufacturing in China.

Securing cheap, steady contracts for Chinese parts and labor has been a key to Apple Inc.'s (AAPLrise to third place in the U.S. personal computer market.

Mr. Bradley says a webOS revival could be in the works.  Following the rash of interest during the webOS clearance, he says several manufacturers (presumably tablet or smart phone manufacturers) have approached HP about licensing the OS.  He also would not rule out a TouchPad revival, stating, "Tablet computing is a segment of the market that's relevant, absolutely."

The PSG head, recently named Fortune's "smartest executive", has big plans -- he says he hopes to be chief executive at the new company, should a spinoff occur.  He states, "Unwinding the integration that's taken place within HP will be enormous amounts of work and effort, justified by the return we think we'll be able to provide to our shareholders.  My intention would be to lead [the PSG] through this transaction...and if it's a standalone public company, to lead that."

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By Flunk on 8/30/2011 9:26:23 AM , Rating: 5
I suggest they instead spin off the rest of the company and name the new company "Leo's Second Failed Experiment Inc.". He's trying to do exactly the same thing he did at SAP(who fired him for his failure).

RE: Spin-off
By 3minence on 8/30/2011 10:03:05 AM , Rating: 2
The Board of Directors must have known Lee would do this when they hired him. In fact, they probably hired him specifically to do this. I can't understand why, but to think this is Lee's idea alone is just not realistic.

RE: Spin-off
By MrBlastman on 8/30/2011 11:23:04 AM , Rating: 2
I'm not sure they did. That little tidbit I read about him trying to appoint 5 board members... that kinda reeks of him trying to meddle his way into complete power to me.

This guy is a sack of dung and it is a shame that HP didn't realize it. Of course, they let Mark go and well that was a tremendous blunder. If it weren't for him, Fiorina's little experiment could have imploded the company.

RE: Spin-off
By jeepga on 8/30/2011 10:05:13 AM , Rating: 2
...Or why not to hire a German business man.

Let the downvotes begin!

RE: Spin-off
By tastyratz on 8/30/2011 10:19:14 AM , Rating: 2
Absolutely. HP's market value is now largely centric on it's branding. PSG should retain the hp computer/compaq computer name and the hp software division should really be more of a spin off if anything else... even if it is done as a stock partnership and has a similar name like "hp software solutions" etc.

Then again, this whole thing is crap to begin with. You don't need to sell off the largest computing manufacturing division in the world to try a crappy new idea holding the carrot on a stick in front of shareholders.

RE: Spin-off
By AntiM on 8/30/2011 11:50:44 AM , Rating: 3
Mr. Bradley states, "A standalone company could and will do what's most required to drive value for shareholders and partners."

Here is the big problem with most large corporations these days. Should they be worried about what's best for their shareholders or should they be worried about what's best for their customers? Making your customers happy should be the first priority. You might want to look at your competition as well. Don't try to release a tablet that is comparable in price to the iPad unless your product is at least as good.

RE: Spin-off
By WackyDan on 8/30/2011 11:21:10 PM , Rating: 2
A more focused, and lean PSG at HP would be more profitable and more competitive.

ie; IBM's former PC Division after it was sold to Lenovo.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer

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