After two months of internal deliberation, Hewlett-Packard announced Thursday, October 26, 2011 that it will continue to run Personal Systems Group and sell PCs, contrary to an earlier decision to withdraw from Personal Computer business lines. This comes as a double surprise, since HP surprised Wall Street and the tech industry back in August with statements of exploring “strategic alternatives” for its Personal Systems unit. A sale or a spin-off were considered at that time. HP’s announcement sparked a resistance from many technology analysts.

The decision to drop PC division two months ago was originated by then-CEO Leo Apotheker, who favored HP’s software and server businesses over its computer business.

HP now says that PCs would be part of future plans.

Being world’s largest PC business, HP had always been anchored in hardware: PCs still make up a third of the company’s revenue. Despite its recent struggles, HP still sells more PCs than any other vendor, shipping 16.2 million personal computers just last quarter. While mobile devices like PDAs, tablets and smartphones have begun to cut into PC sales, the PC business is too embedded in the HP’s supply chain as well as other HP operations. It would not be easy to let it go. HP’s analysis also showed that spinning off the division would be too costly.

“It’s clear after our analysis that keeping the Personal Systems Group within HP is right for customers and partners, right for shareholders, and right for employees,” Meg Whitman, the new CEO HP named last month, said in a written statement. (Whitman replaced Apotheker, who was fired last month).

“As part of HP, PSG will continue to give customers and partners the advantages of product innovation and global scale across the industry’s broadest portfolio of PCs, workstations and more,” said Todd Bradley, head of HP’s Personal Systems unit. “We intend to make the leading PC business in the world even better.”

In light of all the recent changes, and with consideration to the law suit filed against HP for allegedly misleading investor about the status of the Personal Systems Group and WebOS, time will show what will happen to HP’s WebOS software division.

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