HP to speed up decision on PC spinoff

update CEO Meg Whitman to decide by end-October whether to sell off company's PC business. Market analysts welcome move but say success depends on Whitman's ability to control "dysfunctional board".
Written by Ellyne Phneah, Contributor

update Hewlett-Packard is aiming to decide by end-October whether to spin off its PC group, reveals newly appointed CEO Meg Whitman.

Speaking at a conference Tuesday in California, U.S., Whitman said HP would decide on the fate of the company's US$41 billion business unit by the end of the month, according to a Bloomberg report. She noted that it was critical that HP made the decision more quickly, and "much faster than [her] predecessor". 

The executive replaced former CEO Leo Apotheker last month, following his announcement in August that the company was looking to sell its PC business.

Whitman added that it would be "very helpful" if the company met analysts' expctations in HP's fiscal fourth quarter, ending Oct. 31, 2011. Bloomberg analysts had predicted the company would register sales of US$32.1 billion and profits of US$1.13 a share.

According to a separate report from Reuters, the HP CEO told conference attendees that the October timeline "may slip a little bit" but the evaluation process would "certainly [be] much more accelerated" than it had been under Apotheker. She added that she was also "open-minded" about which direction to take with the PC business.

In a previous ZDNet Asia report, research analyst of computer and storage practice at Technology Business Research (TBR), Krista Macomber, suggested HP should retain its PC business which was still profitable, but acknowledged that margins from this market segment were lower than other technology areas.

Faster better for HP's future
Phil Hassey, founder of Australia-based CapioIT, welcomed a quicker resolution to the fate of HP's PC business as the vendor needed to move quickly and decisively to restore market confidence. "The longer it drags, the more damage is done to the PC [section] and HP's overall business," he told ZDNet Asia.

Carter Lusher, research fellow and chief analyst of Ovum's enterprise applications ecosystem agreed: "Expediting the decision to weeks instead of months [is] an excellent move."

He noted, however, that HP should have made this decision even before publicly revealing in August plans to spin off its PC business.

The announcement had grown into "a fiasco" and created uncertainty as the company did not have "a definitive plan", Lusher said in an e-mail interview.

Asked if a decision was likely to be made by end-October, Hassey said it would depend on whether Whitman could control a "dysfunctional board and troubled senior management". He added that she would need to have the full confidence of both senior management and the board to push out decisions more quickly.

Lusher expressed more optimism: "There is no reason why a decisive executive with plenty of money to hire the best advisors cannot make a serious decision relatively quickly. The chaotic decision making under former CEO Leo Apotheker was one of the problems of his tenure."

Editorial standards