HP's Whitman Comes to Senses, Nixes PC Spin Off

Well, that bad idea went away. The world’s largest PC manufacturer, Hewlett-Packard (News - Alert), will remain so, at least for now.

HP’s newly-appointed CEO, Meg Whitman, no doubt to sighs of relief echoing through the tech giant, announced that she’s undoing Apotheker’s Folly, former CEO Leo’s puzzling decision to sell or spin off the company’s lucrative PC division.  

HP reversed course, saying they will, in fact, keep their Personal Systems Group since they’ve suddenly realized just how important is is to HP’s supply chain, procurement and overall brand, according to industry observer Patrick Thibodeau.

"HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It's clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees," Whitman, HP president and CEO, said in a statement. "HP is committed to PSG, and together we are stronger."

Information Week reported that in a conference call held to elaborate on the decision, CFO Cathie Lesjak “estimated that the cost of spinning off PSG would amount to a one-time charge of $1.5 billion and diminish operating profit by $1 billion annually.”

Thibodeau wrote that critics of the idea, whose names are Legion, argued that “the separating the PC division from HP's other product lines would hurt the company's ability to sell into enterprises and would cost it some leverage in buying parts, such as disk drives,” noting that Apotheker considered the PC division a “low-margin distraction,” wanting instead to focus on software and services, high-margin areas for the company.

He might have been suffering a bit of IBM (News - Alert) envy, since Big Blue made a similar move, getting rid of its PC business a few years ago.

But Whitman did make clear that the fate of HP’s webOS is still not clear. She said that the decision to keep PSG “is not necessarily a reprieve for webOS,” Information Week wrote, which Apotheker, much more reasonably, “cast into limbo in August when he eliminated HP's webOS tablet. Whitman said HP will take another run at the tablet business using Windows 8 and is still evaluating the fate of webOS.”