HP Reconsiders Jettisoning PC Unit
October 13, 2011 12:32 PM
comment(s) - last by
New HP analyses show that costs outweigh the benefits, but a decision has not been made yet
Back in August, Hewlett-Packard made a few jaw-dropping business moves that no one saw coming. For starters, it
killed off its TouchPad tablet and accompanying webOS
mobile platform. That very same day, HP confirmed that it was going to
sell off its PC unit
, Personal Systems Group (PSG), which is responsible for its consumer and business PCs.
A little over a week later, HP announced that it would explore other avenues as far as PSG goes, with its focus set on a spin-off. The reason for the change of mind was that no major manufacturer had the cash to buy the $10-12 billion unit. Instead, PSG head Todd Bradley went overseas to Asia to increase investments in China and begin planning to expand manufacturing there as well to obtain cheap contracts for Chinese parts and labor.
Now, HP may be changing its mind once again. HP President and CEO Meg Whitman has been looking at new analyses conducted by HP, and the cost reportedly outweighs the benefits.
According to the analyses,
a spin-off of the PC division
could complicate HP's supply chain, reduce profit margins on certain products and HP could lose economies of scale, thus negatively affecting HP's purchasing power with component makers.
If Whitman were to approve the PC spin-off, HP's other sectors could lose certain advantages they once had.
HP's server computers
, for example, could lose the deals it once had when buying hard drives and other components in bulk. But the company sells many more PCs than servers, with 14.9 million and 720,000 sold respectively in Q2 2011.
Then again, those in favor of the spin-off have advised that HP and an independent PC company could make a deal to buy components together, which would lead to lower costs for the server computer sector.
poses as an example of a company that left the PC business and took a profit hit. During 2004, which was the last full year that IBM sold PCs, profit margins (including servers) was at 41.6 percent. In 2006, this dropped to 37.7 percent, and more recently in 2010, it only increased to 38.5 percent.
Others believe that a spin-off could boost overall profit margins as well as share price. Leo Apotheker, former HP CEO, said the "PC division was on a different track than the rest of the company," especially in the consumer-related corner.
Whitman has not made a final decision yet, but she would like to by the end of the month.
The Wall Street Journal
This article is over a month old, voting and posting comments is disabled
10/13/2011 4:25:58 PM
I didn't have to be ceo to know that it was a bad, bad idea from the start.
at least this new one is somewhat intelligent
"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
HP Leans Towards Spin-Off of PC Business, Rather Than Sale
August 30, 2011, 9:06 AM
Report: HP to Sell Off PC Unit
August 18, 2011, 4:55 PM
HP Buries WebOS, TouchPad
August 18, 2011, 3:43 PM
IBM Celebrates 100 Years in Business, Legacy of Inventions
June 16, 2011, 5:06 PM
HP Kills Its MediaSmart Windows Home Servers, Moves Team to WebOS
December 1, 2010, 8:47 AM
Sony May Consider Spinning Off Entertainment Division
May 22, 2013, 8:19 AM
Seawater Cooling Saves Data Center Big Bucks, Energy, Despite Jellyfish Issues
May 17, 2013, 3:23 PM
Dell Profits Shrink as Contenders Battle to Buyout Company
May 17, 2013, 9:32 AM
AMD, Microsoft Beat Analyst Estimates, Despite Struggles
April 19, 2013, 12:02 PM
Botched Malwarebytes Security Update Cripples Thousands of Computers
April 18, 2013, 10:59 AM
South Korean Police Raid Samsung Offices During OLED Investigation
April 10, 2013, 11:48 AM
Most Popular Articles
High School Student Creates Storage Device that Can Charge in 20 Seconds
May 20, 2013, 6:51 AM
Apples Tries to Use Decade-Old Patents to Ban Samsung Galaxy S IV
May 22, 2013, 3:00 PM
NASA Awards $125,000 Grant for 3D Printed Food on Long-Term Space Travels
May 21, 2013, 1:32 PM
Microsoft Announces Voice-Controlled "Xbox One"
May 21, 2013, 12:55 AM
Cure For Baldness Could Be on Store Shelves within Two Years
May 22, 2013, 8:29 AM
Latest Blog Posts
Lumosity: Does it Work?
May 22, 2013, 8:20 PM
Quick Note: Sony "Teases" PS4 Ahead of Xbox Reveal in New Video
May 20, 2013, 12:33 PM
Nokia Introduces Instagram-Like App of Its Own to Help Lumia Sales
May 20, 2013, 7:10 AM
Parents of Pre-Teen Drivers Commonly Practice Distracted Driving Says Study
May 9, 2013, 7:16 AM
Apple's iOS 7 Running Into Internal Delays Due to Massive Overhaul
May 1, 2013, 4:26 PM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information