HP exec says PC business will remain world's No. 1

BEIJING: Hewlett-Packard Co's personal computer business will retain its position as the world's largest PC manufacturer even after any spinoff, the head of HP's PC business said yesterday.

A spinoff of the Personal Systems Group (PSG) will bring the "best value" to HP shareholders for taxation and other reasons, PSG head Todd Bradley said in an interview. "A standalone company could and will do what's most required to drive value for shareholders and partners," Bradley said.

HP stunned markets when it announced two weeks ago that it is considering shedding its PC business, part of a wrenching series of moves away from the consumer market that included killing its new tablet.

Selling the PC division to a rival such as Taiwan's Acer Inc, which acquired computer maker Gateway in 2007 or to China's Lenovo Group Ltd, which purchased IBM's PC division in 2004, is not a desirable alternative, Bradley said. "I would just say that the numbers don't support that that strategy works," he said, citing Acer reporting its first-ever quarterly loss last week.

HP has been struggling in the PC market - a high-revenue but low-margin business - as popular devices such as Apple Inc's iPad have lured consumers away.

Bradley is on a trip to China, Taiwan and South Korea to meet with employees, suppliers, government officials and media to convince them that HP's PC business will remain robust and committed to Asian markets. "China's obviously a critically important market for HP as well as PSG."

Bradley said HP will increase investments in Shanghai, and over the next three years expand its Shanghai manufacturing base, consolidate six employee sites into one campus, and make Shanghai a regional headquarters in China for the PSG.

Bradley said the company could resurrect HP's short-lived TouchPad tablet computer, which was introduced on July 1 before being terminated only about six weeks later. "Tablet computing is a segment of the market that's relevant, absolutely," Bradley said.

A standalone incarnation of HP's PC business would be a full-line computer maker including ultrathin and all-in-one PCs. He said he is stressing that "regardless of what happens, we're the largest PC firm in the world. We need everybody energised, and while this isn't business as usual, we need people to go out and sell products every day."

Suppliers to HP PCs will remain largely intact, although the company may renegotiate and redefine the relationships. "Unwinding the integration that's taken place within HP will be enormous amounts of work and effort, justified by the return we think we'll be able to provide to our shareholders."

Nevertheless, he said, "we will be one of, if not the largest customers of all of our major suppliers, be it Samsung to LG to Microsoft to Intel."

The Palo Alto, California-based company is now exploring options for its WebOS software, which it acquired through the acquisition of Palm, of which Bradley is a former chief executive. Bradley has said in the past that a number of companies had expressed interest in possibly using WebOS as an operating system, but he gave no further details yesterday, saying that he is not in China to announce or even negotiate anything regarding WebOS.

HP's board will meet in December to decide on the course to take with the PC business, although insiders assume the decision will be a spinoff. - Reuters