HP reconsiders PSG spin-off plan

May gain more by keeping the unit.

HP CEO Meg Whitman may be reconsidering HP’s proposal to spin off its PC business, after an internal analysis showed HP may gain more by keeping the unit, according to a report in The Wall Street Journal.

The analysis favours holding on to the Personal Systems Group, which is a significant revenue source for the company, bringing in $US40 billion ($A40.32 billion) in revenue and $2 billion in operating profit in HP’s last fiscal year, The Journal reported.

“In particular, separating the PC division would significantly diminish HP's buying power with component makers because HP would lose economies of scale,” according to The Journal. It could complicate HP's supply chain and decrease profit margins on some products, the analysis suggest.

“’If you lose purchasing power and other advantages, then a spin-off isn't worth it,’ one of these people said,” The Journal reported.

The analysis re-examined options initiated by outgoing CEO Leo Apotheker, who announced the possible sale or spin-off of PSG on August 18. Apotheker was ousted September 22, and replaced by Whitman.

No definitive decision has been made yet, although Whitman has said a decision will be made by the end of October.

Apotheker's announcement caused great uncertainty among HP's partners in the channel about the company's direction. Rivals such as Lenovo have weighed in and cast doubt on HP's situation, with the company claiming up to 40 of HP's traditional partners have jumped ship in Australia.

HP Australia's Janice Cox told CRN last week the company's business was as strong as ever.

This article originally appeared at crn.com