HP says prefers to spin off PC unit

SAN FRANCISCO Mon Aug 29, 2011 6:42pm EDT

A logo of HP is seen outside Hewlett-Packard Belgian headquarters in Diegem, near Brussels, January 12, 2010. REUTERS/Thierry Roge

A logo of HP is seen outside Hewlett-Packard Belgian headquarters in Diegem, near Brussels, January 12, 2010.

Credit: Reuters/Thierry Roge

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SAN FRANCISCO (Reuters) - Hewlett-Packard said on Monday it prefers to spin off its personal computers unit and is currently working on understanding the larger implications of separating the business from the company.

The world's largest technology company by revenue shocked investors when it announced earlier this month that it is considering strategic alternatives for its Personal Systems Group (PSG) -- which includes PCs -- and would kill its new tablet computer as part of a major revamping away from the consumer market.

"We prefer a spin-off as a separate company and the working hypotheses is that a spin-off will be in the best interests of HP's shareholders, customers and employees," a HP spokeswoman said. "However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG business from HP."

Some of the alternatives HP is exploring for the PC unit include hiving off the business into a separate company through a spin-off or sale.

HP said the whole process could take 12 months to 18 months, but a final decision on the unit is expected by the end of this calendar year.

The California-based company has been struggling in the PC market -- a low-margin but high revenue business -- as niftier gadgets such as Apple Inc's iPad have lured consumers away.

HP's WebOS-based TouchPad was killed after sales failed to take off. The company is now also exploring options for its WebOS software, which it acquired through the acquisition of Palm.

(Reporting by Poornima Gupta; Editing by Tim Dobbyn)

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Comments (3)
Caswell wrote:
HP shouldn’t throw away a diamond just because its CEO doesn’t recognize it in the rough!

If kept, developed and promoted, the HP tablet would produce a mint from advertising revenues as well as from manufacturing. A tablet is an irresistible and profitable electronic newspaper and computer with everything in it from the latest news to when the next bus is coming to where you might meet a friend for lunch; it also gives you the ability to buy and sell stock, write reports or run a spread sheet.

HP’s tablet would give them the third spot in the highly profitable tablet OS market and assure HPs future. The competitive moat would probably be too great for any more entrants. A fool should know that it’s going to be a fight to establish a new brand. You have to take your lumps and swing back. Develop and promote the usefulness of the product to the press and consumer!

Acceptance is a given if the consumer wants the Web OS tablet. Smartphone manufacturers would sign on. They’d walk over coals to have the leverage of a third platform, because Google might shut them down for competing. Cell providers would welcome a third platform. They could ask for more of the profit from the sale of their smart phones. Google and Apple would probably welcome the Web OS to avoid the appearance of a lack of competition. The monopoly problem has already dogged Microsoft and Apple.

Did Apotheker come out swinging? Does he dazzle the press and woo consumers with the cool qualities of his new product, that really is faster?

No he throws in the towel and throws the tablet away. HP’s board should fire the bum because he’s a coward with a glass jaw! He falls on the mat and gives up when the press fan him with a gentle poke on the lack of sales of the OS tablet. Slow sales should have been expected at first! Why should people move from a sure thing to something new?

HP needs a CEO with panache like Steve Jobs to promote its Web-OS tablet.

Jobs didn’t quit when someone mocked the iphone. He genially, or not so genially, replied to the criticism and proved that it was “cool”. When faced with a new product, consumers are like a cow at a new gate. They won’t make the plunge unless someone else goes in first. “Do you want to buy that new tablet? It’s faster but it doesn’t have as many apps and Apple is ‘cool.’ I don’t know. It’s $500, a lot of money!”

They want someone to show them the advantage of moving: Apotheker could have had the coolest Apple apps transferred to Web OS, added Google’s translate, and developed a cloud translator to port apps from the ipad to the Web OS. Once leaders try and approve of a new product as cool, the masses follow: “The HP tablet is faster, useful and cheaper. I’m not going to waste money to buy an Ipad!”

If he won’t promote HP’s products, Apotheker should face a firestorm of stockholder protest that causes him to run to the exit faster that a tipsy barfly who wanders into a Mothers Against’ Drunk Driver’s meeting.

Aug 29, 2011 9:51pm EDT  --  Report as abuse
Jeepgirl wrote:
Very well said, Caswell. I have used HP as the standard since HP products have become so very reliable and priced to compete. The WebOS has tremendous potential as a stable platform ripe for extreme development.

HP needs someone to flood the market with promotional advertising and get programmers on the team to make sure HP stays on top. Meanderings regarding spinning off a division like the computer and tablet group just make people want to run from HP as fast as possible.

HP needs to get rid of that stupid CEO and look to development and the future just as intel does.

Aug 30, 2011 1:37am EDT  --  Report as abuse
jscott418 wrote:
I see HP’s point of view on this. Computers are a very competitive market and except for Apple have a difficult time keeping profit margins up. HP has tried to go the Apple route by making attractive and stylish PC’s which in many cases they have. But they don’t have that consumer who is willing to pay a higher price for them.

Aug 30, 2011 5:45am EDT  --  Report as abuse
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