HP Reconsiders PSG Spin-Off Plan: Report

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Hewlett-Packard CEO Meg Witman may be reconsidering HP’s proposal to spin off its PC business, after an internal analysis showed HP may gain more by keeping the unit, The Wall Street Journal reported late Tuesday.

The analysis favors holding on to the Personal Systems Group, which is a significant revenue source for the company, bringing in $40 billion in revenue and $2 billion in operating profit in HP’s last fiscal year, The Journal reported.

“In particular, separating the PC division would significantly diminish H-P's buying power with component makers because H-P would lose economies of scale,” according to The Journal. “It could complicate H-P's supply chain and decrease profit margins on some products, the analyses suggest.

“’If you lose purchasing power and other advantages, then a spin-off isn't worth it,’ one of these people said,” The Journal reported.

The analysis re-examined options initiated by ex-CEO Leo Apotheker, who announced the possible sale or spin-off of PSG on August 18.

No definitive decision has been made yet, although Whitman has said a decision will be made by the end of October.

Apotheker's announcement caused great uncertainty among HP's partners in the channel about HP's direction. And rivals such as Cisco and Dell weighed in and cast doubt on HP's situation.

Apotheker was ousted September 22, and replaced by Whitman.

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