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HP prefers to spin off PC unit, report says

A Reuters report today says HP prefers to spin off its PC unit rather than sell it outright.

Hewlett-Packard said today that it prefers to spin off its PC business rather than sell it outright, according to a Reuters report.

The 3.5-pound HP Pavilion dm1z ultraportable has been one of HP's more successful consumer laptops.
The 3.5-pound HP Pavilion dm1z ultraportable has been one of HP's more successful consumer laptops. Hewlett-Packard

The company is studying the ramifications of the spinning off its personal computer business, according to the report.

Earlier this month, HP announced that its board of directors had "authorized the evaluation of strategic alternatives" for its Personal Systems Group (PSG). Those alternatives include the separation of its PC business into a separate company through a spin-off or other transaction.

"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 spokeswoman told Reuters.

HP said in a statement on August 18 that the process will take 12 to 18 months, but a decision is expected sooner rather than later, possibly before the end of the year.

The announcement of plans to spin off the PC business raised eyebrows on Wall Street and in the analyst community because, among other reasons, HP is the largest PC maker in the world and derives significant benefits from that status. Some analysts believe that HP needs PCs to compete effectively.

"Steve Jobs showed us that the product is not an end in itself. It's a vehicle," said Ashok Kumar, an analyst at Rodman & Renshaw, who said that PCs are a necessary adjunct to services and software.

And in a TechCrunch interview with Rahul Sood, a former HP executive who joined HP when it acquired Voodoo Computers, he said "the world needs hardware to make money on software. There is no bigger hardware company than HP. If only they could better leverage their footprint in a meaningful way they'd be almost unstoppable."