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HP to decide on PC spin-off plans by year end

Agam Shah | Sept. 22, 2011
New CEO Meg Whitman on Thursday said the company will decide on a proposal to spin-off the PC unit by the end of the year.

"Aside from synergies, the PC business is still a contributor to the bottom line," Kay said.

However, PSG's webOS software and hardware business could be toast after being mishandled by Apotheker, Kay said. Apotheker inherited the webOS business after HP bought Palm last year when Mark Hurd was CEO. HP killed the tablets and smartphones, but said it would retain webOS software and license it to third parties.

HP's TouchPad became hot only after it a drastic price drop to $99 from $499, so Apotheker must have prematurely dismissed the market, Kay said. Had the TouchPad sold for $299, HP would have sold a few thousand units, enough to establish a beachhead in the market, Kay said.

There is also little interest in licensing WebOS, Kay said, adding that it stands little chance against competing mobile platforms such as Apple's iOS and Google's Android. Microsoft's upcoming Windows 8 OS for tablets will make it even more challenging for WebOS to survive.

"Nobody wants to license [WebOS]. If they don't build their own hardware and can't license it, they bought Palm for nothing," Kay said.

Disagreeing with analysts, consultant Steven Protter said HP should move ahead with plans to spin-off the PC business to maintain financial integrity. Protter specializes in HP server and software integration.

"I believe that the PC business is low margin and agree with HP's decision to spin it off so long as they retain their server business," Protter said.

 

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