It's Official: HP is Keeping its PC Division

Thursday HP finally ended the drama over its PC division (aka Personal Systems Group or PSG) which began during the summer with the announcement of a possible spin-off or outright sale. According to the company, the unit will remain as part of the HP collective -- it won't be sold or spun-off into a separate company.

"HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees," said Meg Whitman, HP president and chief executive officer. "HP is committed to PSG, and together we are stronger."

Many in the industry are likely breathing a sigh of relief, especially those who were afraid that HP's withdrawal would send PC components up in price. Even Intel CEO Paul Otellini was blown away with the initial news, admittedly asking himself "what was he thinking?" when HP's former CEO Leo Apotheker made the announcement.

"I was stunned," Otellini said in an interview with FOX News. "I hope that they will decide to stay in the business. To leave consumer digital electronics, to me, would be a very strange decision to make when your whole business model is tied up into imaging and those kinds of things."

But now HP is seemingly staying the course with its PC business, bringing balance back to the PC sector. "As part of HP, PSG will continue to give customers and partners the advantages of product innovation and global scale across the industry’s broadest portfolio of PCs, workstations and more," said Todd Bradley, executive vice president, Personal Systems Group, HP. "We intend to make the leading PC business in the world even better."

HP said that part of its strategic review revealed the depth of its PSG integration that has occurred across key operations such as supply chain, IT and procurement. The review also detailed the significant extent to which PSG contributes to HP’s solutions portfolio and overall brand value. It also showed that the cost to recreate these in a standalone company outweighed any benefits of separation.

"The outcome of this exercise reaffirms HP’s model and the value for its customers and shareholders," the company said. "PSG is a key component of HP’s strategy to deliver higher value, lasting relationships with consumers, small- and medium-sized businesses and enterprise customers. The HP board of directors is confident that PSG can drive profitable growth as part of the larger entity and accelerate solutions from other parts of HP’s business."

More information about the decision is available at www.hp.com/investor/PSG-Decision.