Rumors of HP splitting up shot down

While reports say HP is mulling a breakup, source says it's not happening

Reports circulating that Hewlett-Packard's board of directors is considering a breakup of the company are untrue, a source close to company said.

The financial news site reported on Tuesday that HP's board is again discussing splitting up the company. The report stirred up stories about the possible split on sites ranging from the Wall Street Journal to the San Jose Mercury News.

It wouldn't be the first time HP considered breaking up the company. In 2011, the company announced it was considering a spinoff of its PC unit.

HP later decided against the move, but news of it created months of online chatter and confusion about the company's commitment to the PC market.

An HP spokesman declined to comment on the most recent speculation.

However, a source close to the company said HP plans to keep all of its core businesses together. The source added that the company has no plans to get rid of its PC division.

Dan Olds, an analyst with The Gabriel Consulting Group, said, "Speculation about HP splitting up the company is, at best, a distraction and, at worst, something that could sow uncertainty among their customers. Competitors will, of course, jump onto any of these rumors and spin them in a way to lead customers to believe that HP will potentially be abandoning them soon."

That could be an issue for a company that has been struggling to fend off Lenovo to retain its No. 1 position in the PC market.

It also would be ironic since on Tuesday HP made a public statement dissing rival Dell's leveraged buyout plan, and making it clear that HP is looking to grab some of Dell's customers.

With Dell's buyout plan and HP's publicly going after Dell, all combined with the troubled PC market, it's not surprising that speculation about HP's future would arise.

Jack Narcotta, an analyst with Technology Business Research, said, "It's stating the obvious to say that HP's recent track record has stirred up the rumor mill. HP is a year into [CEO] Meg Whitman's multi-year plan to turn the company into a solutions provider. All of its components... are, at this point, important pieces in the future HP."

Narcotta added that reports of a split shouldn't hurt HP. It's speculation that has been bandied about for some time and the company itself has even opened the door to the idea.

"It's easy for pundits to dismiss HP, but I think it's easy for those pundits to forget that the company generated almost $11 billion in cash in 2012, over $4 billion of that coming in 4Q12," he added. "It's a $120 billion company that is going through growing pains a year into Whitman's five-year plan."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at  @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her email address is

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