HP decides to remain in the PC business

Hewlett-Packard Co. will keep making personal computers after all.

The world’s largest computer maker said Thursday that it would not spin off its Personal Systems Group, which makes PCs, into a separate company, an idea it first floated in August.

HP’s new chief executive, Meg Whitman, said the decision came after the Silicon Valley giant “objectively evaluated the strategic, financial and operational impact” of divesting the business.

“After reviewing the results of the analysis, the decision was actually very straightforward,” Whitman said in a conference call with analysts Thursday. “A separation would not create incremental shareholder return or customer value.”

HP — the world’s biggest seller of desktop and laptop computers — two months ago said it was considering exiting the personal computing business it helped establish, among other changes. The plan was seen as an effort to move away from the slumping PC business and toward the more vibrant and stable market for corporate software.

At the time, then-Chief Executive Leo Apotheker said the changes were “fundamental to the success we all want as shareholders, investors and customers.”

But the restructuring plans were widely panned by investors, causing a sharp drop in HP shares and leading in part to Apotheker’s ouster from the company last month after less than a year in the top job.

On Thursday, the company said a data-driven strategic review had concluded that the PC business contributed significantly to HP’s portfolio; it also said the cost to re-create that brand value in a stand-alone company “outweighed any benefits of separation.”

Shares of HP rose $1.24, or 4.8%, to $26.99. Its stock is down 8.5% since Aug. 18, when Apotheker said the company was thinking of divesting the PC business.

News that the company was backtracking came as little surprise to industry analysts.

“This is one of those outcomes that was apparently predictable to everyone but to them,” said Rich Kugele, research analyst at Needham & Co. “You just can’t change a tiger’s stripes that abruptly without thinking about it more thoughtfully.”

Michael Holt, senior equity analyst at Morningstar Inc., said although PCs are “definitely not the future” for HP, keeping the business was probably the best near-term move for the company.

“It just signals the strategy right now is to restore order to the chaos,” he said. “So I don’t think this is a bad move; it’s always something they can revisit.”

andrea.chang@latimes.com