Yesterday it was announced that HP was sticking with its PC Division. It had become apparent that the spinoff option was not going to happen primarily because it would hurt HP in ways it had perhaps not considered. Being the world?s leading maker of consumer and corporate PCs gives HP a great deal of leverage with component suppliers like Intel, Advanced Micro Devices, Seagate and others, and helps its strategically important server business. PCs carry slim margins; servers don?t. Losing that negotiating power would have hurt the more profitable server business, so naturally the PC business had to stay.
The decision marks the first significant reversal of course by HP?s new CEO Meg Whitman, who took over when the company?s board of directors ousted L?o Apotheker after a rocky, 11-month tenure.