HP announces that it is too costly to keep PC business spin-offs

Hewlett-Packard Co. said today that the company has completed the evaluation of strategic options and decided to retain the PC business unit. HP's former CEO Li Aike's proposal was eventually rejected.

Cathie Lesjak, an HP CFO, pointed out that the spin-off of the PC business requires a one-time fee of $1.5 billion. At the same time, there are many benefits to retaining the existing PC business, including the bargaining advantages of purchasing large chips, hard drives, and other parts and components, which will bring in additional benefits of well over a billion dollars. Lesjeco pointed out: "On these numbers alone, we can gradually and clearly see what direction we should choose."

HP CEO Meg Whitman issued a statement on a conference call saying that based on the company's analysis, the spin-off of the PC business unit could not bring any additional benefits to the company from an economic perspective. She stressed that HP's PC business unit is "HP's core assets."

The HP statement reads as follows:

The evaluation of strategic alternatives to the PSG (Personal Systems Group, mainly for the PC business) has been completed and it is decided to retain the business and it will continue to be part of the company.

Hewlett-Packard President and CEO Whitman said: “In terms of the strategic, financial and operational impact of divesting PSG, HP conducted an objective assessment. It is clear that after the analysis, PSG will remain within HP, which is for customers and partners. It is correct to say that it is right for shareholders and correct for employees. HP will continue to operate PSG and we will become stronger."

Experts involved in strategic assessment are very extensive, both business and functional. The data evaluation shows that there are deep integrations in some key operating departments, such as supply chain, IT and procurement. It also clarified the role of the PSG department in HP's solution products and overall brand value. Finally, the assessment also shows that the spin-off of PSG as an independent company is greater than the benefits of spin-offs.

The results of the assessment reaffirmed HP's model and its value to customers and shareholders. PSG is a key part of HP's ability to deliver higher value and maintain consumer-SMB and corporate customer relationships. The HP Board of Directors believes that PSG as an integral part of HP can drive profit growth and accelerate the consolidation of HP's other businesses.

PSG has a history of innovation, has technical leadership, and has an industry-leading level of profitability. It is the world's largest personal computer sector, with total revenue of $40.7 billion in fiscal 2010.

Todd Bradley, executive vice president of HP's PSG, said: "PSG's products include PCs, workstations, etc., with broad business scope. As part of HP, PSG will continue to provide customers and partners with product innovation and global scale advantages. We will make the world's leading PC business even higher."