After leaving the markets hanging for a few weeks, HP has finally clarified its future plans in the PC business: it’s in. HP will not undertake the course of action began by former CEO Leo Apotheker to spin off the PC business. This marks the first major change led by new CEO Meg Whitman. Don’t get too excited; webOS is still dead (we checked).
Analysts, for once, called this one correctly. When looking at the numbers, it would be foolish for HP to cede its current high ranking in PC sales. That position affords the company extensive leverage over component suppliers like AMD, Intel, Western Digital, and others. This move would have been a big hit to the server business, which is highly profitable.
Even in the commodity market, HP’s PC business still makes money. There’s no reason to risk the massive uncertainty of spinning it off, as Netflix recently learned. Do you agree with HP’s decision?