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HP amps up media blitz for PC spin-off

Hewlett-Packard begins to run ads in the media to push a PC company spin-off agenda.

Hewlett-Packard is turning up the volume on its pitch to spin off the PC business.

In the wake of announcing its intention to "evaluate strategic alternatives" for its PC business, HP is now making a case, via ads in the media--such as today's San Francisco Chronicle--to spin off the PC unit as a separate company.

That means HP is likely leaning strongly toward precluding other alternatives such as selling the business to another PC maker. "We prefer a spin-off as a separate company and the working hypotheses is that a spin-off will be in the best interests of HP's shareholders, customers and employees," an HP spokesperson told CNET today.

"However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG (Personal Systems Group) business from HP," the spokesperson said.

HP's ad takes these comments a step further by proclaiming that "HP is the number-one PC maker on the planet. Every second, we sell two PCs somewhere in 170 countries around the globe. On it's own, the HP PC business is a $40 billion company."

The ad then explains that a separate PC business will create a "more agile organization to help us better anticipate change and quickly respond to customers."

HP's ad clearly lobbies for a spin off of the PC business into a separate company.
HP's ad clearly lobbies for a spin off of the PC business into a separate company. Hewlett-Packard

"What they're doing is shoring up their position and trying to overcome the FUD [fear, uncertainty, and doubt] that corporate side of HP created," said Bob O'Donnell, an analyst at IDC.

"The problem is that PSG is a huge business. If they spun it out as a $40 billion business it would be Fortune 60. It would be one of the 60 largest companies in the U.S.," O'Donnell said.

O'Donnell continued. "HP corporate put PSG in a very difficult spot. When you think about it, all of HP's competitors are going to jump on the opportunity to say, 'hey, we're around and we're not changing our business.'"

And the fact that HP created this uncertainty on its own, makes it vulnerable. "HP has to defend itself...because all of sudden all of these big corporations that were buying HP PCs are like, wait a minute, what's going on? So, I think HP's natural reaction is to say, hey, we're not going away," he said. "We're still here. We're still big."

But it will take time to become a separate $40 billion company. "Due diligence has to be done to figure out everything as they extricate a huge piece of the company...and how does that play itself out all the way up and down the food chain," he said.

Finally, O'Donnell adds that there's been no definitive statement on what exactly HP is going to do. And he believes no one will know for several months.