HP Reconsidering Plans to Spin Off PC Unit

Technology giant Hewlett-Packard Company (NYSE: HPQ) is reconsidering plans to spin off its personal computer (PC) unit, according to a report by the Wall Street Journal.

The Journal, citing people familiar with the situation, reported that the Palo Alto, California-based company is reconsidering its plans after fresh analysis showed the costs of a spin off might outweigh the benefits. The spin off was proposed by Leo Apotheker, who was ousted from the post of CEO recently. HP’s newly appointed CEO, Meg Whitman is currently crunching the numbers of the proposed spin off, people familiar with the matter said.

The Journal, citing some of the people, said that Whitman and the company’s Board of Directors are yet to make any final decision on the issue. Whitman, recently, said that she may come up with a final decision on the issue by the end of October.

Plans for a spin off were first floated by the company in August as it considered its strategic alternatives. The company planned to spin off the PC unit into a separate independent company. The planned move from Apotheker, however, did not go down very well with investors.

Apparently, the company is now reconsidering the plans as new analyses conducted by Whitman and her executives shows that the company is better off keeping the division. HP’s PC unit had contributed $40.1 billion to the company’s revenue in the previous fiscal year.

People familiar with the matter told Wall Street Journal that spinning off the PC unit would substantially reduce the company’s buying power with component makers. However, some of the company’s executives still favor a spin off, one of the persons familiar with the matter said.

HP shares ended marginally lower in trading today. The stock closed 0.19% lower at $25.87. In the last three months HP shares fell 26.65%.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.