Hewlett Packard to Retain its PC Division

October 28 00:00 2011

New York, October 28 (RainbowNewsLine.com) – In a turnaround from its earlier decision, Hewlett-Packard (NYSE: HPQ) announced Thursday that it would retain its PC division. In the last fiscal year, this division, also known as the personal systems group, churned out almost one-third, or $40 billion, of HP’s $126 billion in revenue.

H.P.’s chief executive, Ms. Whitman said in an interview, “First and foremost, HP is a hardware company. We want to build out our software, but I don’t think we are done yet on hardware. There is a lot of opportunity.” In August, the former chief executive, Leo Apotheker had announced that the division would be sold or spun off. He was replaced by Ms. Whitman a month later.

Justifying her decision for retaining the PC division, Ms. Whitman said that an independent PC unit might lose brand value and face higher overhead costs like real estate and operations. The parent company, HP, would lose the contribution being made by the division in delivering low-price components, like semiconductors, to other parts of the company. Moreover, apart from personal computers, H.P. has sizable businesses in computer servers and data storage devices, printers and printer supplies, and related services.

Since the personal systems group is one of the world’s largest buyers of semiconductors, HP gets the negotiating power for the chips it uses in other areas of activities like computer servers and data storage devices, or printers.