HP Chairman Wants PC Business Spinoff To Carry HP Name


 

Such a move would provide two benefits to HP, said Lane. The first benefit is to give the PC business the ability to work with its own business model, he said.

"(It could) do what it needs to do to serve customers and serve investors, without moving at the pace or cadence that HP was moving on the enterprise information side," he said.

The second benefit would be to for investors, who Lane said are looking for cash flow in the form of dividends and stock buybacks but not in the form of innovation.

"I think when you look at a technology company, everybody assumes that investors want you to continue to innovate," he said. "But there are a lot of investors that don't want that. A lot of investors are in HP for the cash flows, in HP for the returns of those cash flows to stockholders, and actually don't like big innovative steps."

The PC business produces tremendous cash flows, but with low profitability, Lane said.

"But it's the biggest PC business in the world by far, and it is the most profitable by far," he said. "But still, in the context of HP, it delivers $2 billion profit per year on a $41 billion business plan. So these are clearly becoming two different businesses. And we think these businesses should be looked at separately. And, if warranted, and we just don't know yet, if warranted, spun out."

Unfortunately for HP, it had to make some sort of announcement to prevent even more confusion later, Lane said.

"If you do all the work to determine whether it's viable to spin out before (you spin it out), we end up with a leak," he said. "We can't afford to have hundreds of people working on a project without some kind of leak, and then we're having to explain it to the press anyway. So we thought it best that we go out and explain that we are going to look at this option for the benefit of that business model, the customers, and the investors."

Additional reporting by Steve Burke