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HP rethinks selling PC dvision

by on13 October 2011

Better off keeping it for now

Papers presented to the maker of expensive printer ink, HP suggest that spinning off or flogging the outfits PC devision is silly.

According to the Wall Street Journal, papers that have crossed HP's board and Meg Whitman's desk have indicated that it would insane to lose a a  division responsible for 29 per cent of HP's revenue last quarter. The analyses  suggests the company is better off keeping the division, which contributed $40.1 billion in revenue and $2 billion in operating profit in H-P's last full fiscal year.

Apparently it goes well beyond margins. Separating the PC division would significantly diminish H-P's buying power with component makers because HP would lose economies of scale. HP's supply chain would be gutted and it would lose profit margins on some products. All seems obvious, but apparently was not thought of by former CEO Leo Apotheker who was a software rather than a hardware sort of bloke. Supply chains and margins are usually a problem that other CEO's face, but he never did.

The question is why did HP push through with part of Apotheker's cunning plan to turn HP into a bigger SAP by buying British software company Autonomy? In short they just paid $10.2 billion for something they probably no longer need. Analysts are starting to think that HP's CEO's are never really the problem, but it is its board of directors, which are increasingly starting to look like a Frank Oz creation.

Word on the street is that some shareholders are starting to sharpen their scythes and it will be board members they want to to remove.

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