NEW YORK (CNNMoney) -- Hewlett-Packard announced Thursday that it will continue selling personal computers after all, reversing an earlier decision to exit one of its core business lines.
The company shocked Wall Street and the tech industry alike when it announced Aug. 18 that its board was exploring "strategic alternatives" for its Personal Systems unit. That division mainly comprises HP's PC business, which is the world's largest. A sale or spin-off were two of the options being considered.
Yet HP (HPQ, Fortune 500) now says it believes that PCs should be part of its future.
"It's clear after our analysis that keeping the Personal Systems Group within HP is right for customers and partners, right for shareholders, and right for employees," Meg Whitman, the new CEO HP named last month, said in a written statement. "HP is committed to PSG, and together we are stronger."
The company said it believes the PC business is too ingrained in the company's supply chain and other key HP operations to let it go. Computers also help promote HP's brand, and are a crucial part of the company's "one-stop shop" services that it offers to corporate customers, HP said.
HP's analysis also showed that spinning off the division would be so costly that it outweighed any benefit of dropping PCs.
The decision to ditch PCs came two months ago from then-CEO Leo Apotheker, who favored HP's fast-growing, highly profitable software and server businesses over its low-margin computer business. HP's PC unit was one of the industry's most profitable, but the company still only squeezed out about a 5% margin on the devices.
The company shocked Wall Street and the tech industry alike when it announced Aug. 18 that its board was exploring "strategic alternatives" for its Personal Systems unit. That division mainly comprises HP's PC business, which is the world's largest. A sale or spin-off were two of the options being considered.
Yet HP (HPQ, Fortune 500) now says it believes that PCs should be part of its future.
"It's clear after our analysis that keeping the Personal Systems Group within HP is right for customers and partners, right for shareholders, and right for employees," Meg Whitman, the new CEO HP named last month, said in a written statement. "HP is committed to PSG, and together we are stronger."
The company said it believes the PC business is too ingrained in the company's supply chain and other key HP operations to let it go. Computers also help promote HP's brand, and are a crucial part of the company's "one-stop shop" services that it offers to corporate customers, HP said.
HP's analysis also showed that spinning off the division would be so costly that it outweighed any benefit of dropping PCs.
The decision to ditch PCs came two months ago from then-CEO Leo Apotheker, who favored HP's fast-growing, highly profitable software and server businesses over its low-margin computer business. HP's PC unit was one of the industry's most profitable, but the company still only squeezed out about a 5% margin on the devices.
