HP may keep PC unit after all

Summary:The longer HP's personal systems division remains in limbo the easier it is for rivals to poach sales.

HP is reportedly having second thoughts about its plan to spin off its PC unit and may wind up keeping the business.

According to the Wall Street Journal, HP's CEO Meg Whitman is looking over the figures behind the spin-off proposal. Whitman has said she wants to make a decision on the PC unit soon and she really doesn't have a choice. The longer HP's personal systems division remains in limbo the easier it is for rivals to poach sales.

The biggest reason to keep the PC unit is related to the supply chain. If HP spun off the PC unit it would have less buying power for components. The lack of purchasing power would hurt margins on HP's servers, which are delivering solid sales for the company.

HP is rerunning numbers used to justify the PC spinoff because it's possible that Leo Apotheker, the former CEO, was predisposed to ditching the unit because his background revolved around software.

The balancing act for HP revolves around the short-term and long-term implications of keeping the PC business. For now, HP would keep the PC unit to preserve margins and the server business. However, it's unclear whether keeping the PC unit would result in long-term pain. PC demand is under fire from tablets and mobile devices. That onslaught could only get worse.

Related:

Topics: Hardware, Hewlett-Packard

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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