New HP CEO Meg Whitman jettisons plan to ditch PCs
— -- Computer pioneer Hewlett-Packard has had a change of heart about breaking from its PC business.
Thursday's announcement that it plans to keep its personal computing division is an about-face from recent talk of a sale or spinoff — and a bold first move by CEO Meg Whitman.
"It would be very challenging for a new PC company to build such a brand," Whitman said on a conference call with reporters and analysts. "The costs and the risks of separation are simply greater than any value we could create."
Last month, HP installed Whitman as chief executive after a disastrous 10-month run by former CEO Leo Apotheker.
In August, Apotheker stunned the industry with a proposal to spin off or sell the PC unit, which accounted for more than $40 billion in revenue and $2 billion in operating profit last year.
HP also shuttered its WebOS-based TouchPad tablet computer after less than two months on the market in the face of iPad competition. And it announced a $10.3 billion proposed acquisition of software maker Autonomy, as part of a planned push deeper into software and services. Investors questioned the moves and the steep price for Autonomy. HP's stock shed roughly 25% of its value in August. Shares rose $1.24 Thursday to close at $26.99.
Now, HP needs to pump up the confidence of customers, employees and Wall Street. "They went full throttle to do everything possible to minimize the wreckage today," IDC analyst Danielle Levitas says.
In the third quarter of 2011, HP held the worldwide crown for PC unit shipments with 17.7%, followed by 13.5% for China's Lenovo and 11.6% for Dell, researcher Gartner says. HP is still uncertain what to do with WebOS but plans to stay in tablets, Whitman said. "We need to be in the tablet business … and we're certainly going to be there with Windows 8."
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