Hewlett-Packard, the world's largest computer maker, reportedly is reconsidering a dramatic decision made in August by former chief executive Leo Apotheker to explore spinning off or selling its computer division.
That announcement -- coming in conjunction with the news that HP would kill off its webOS mobile operating system and buy British software company Autonomy -- jolted the tech world and set in motion the sequence of events that eventually led to Apotheker's dismissal weeks later, a mere 11 months into his tenure.
HP's board and Meg Whitman, Apotheker's successor, told investors last month that the strategic decisions made under the former CEO would stand for now. Indeed, the company went ahead and closed the $10.2 billion Autonomy deal last week.
Apotheker's rationale behind HP spinning off its PC division was that the unit returned low margins, faced increasing pressure on sales from tablets and other mobile computing devices, and didn't fit in with the company's emerging enterprise services strategy.
However, the wisdom of losing a division responsible for 29% of HP's revenue last quarter is being challenged by new analyses that go beyond the margin numbers.
From the Wall Street Journal:
But the new analyses, which Ms. Whitman and other executives are now studying, suggest the company is better off keeping the division, which contributed $40.1 billion in revenue and $2 billion in operating profit in H-P's last full fiscal year, [people familiar with the matter] said.
In particular, separating the PC division would significantly diminish H-P's buying power with component makers because H-P would lose economies of scale. It could complicate H-P's supply chain and decrease profit margins on some products, the analyses suggest.
Not the kind of repercussions you would expect a software guy like Apotheker to think through or care about. But wasn't this sort of thing discussed before the August announcement? And didn't Whitman and other board members sign off on the Apotheker plan they're now so soberly reviewing?
Meanwhile, if you're a potential PC buyer or enterprise customer, how eager are you to buy from such a confused company right now?
As has been argued many times by myself and others, the fundamental problem with HP is its board of directors, which, more than former CEOs Apotheker, Mark Hurd or Carly Fiorina, is responsible for the company's steady decline.
That the same people who drove the HP car into the ditch are now trying to get it out can hardly inspire investor confidence.