HP's New CEO Sets a Spinoff Deadline

HP Inc. (NYSE: HPQ)'s new CEO, former eBay Inc. (Nasdaq: EBAY) Chief Meg Whitman, told investors Thursday that under her leadership, HP would continue to invest in webOS and would spin-off its Personal Systems Group computer business by the end of the year. (See HP Names Meg Whitman CEO and HP Plots a CEO Ouster .)

Whitman addressed investors just after being announced as Leo Apotheker's replacement. She told investors she supported Apotheker's decisions announced on Aug. 18: to acquire Autonomy Corp. ; discontinue the Pre, TouchPad and Veer; and to evaluate a spinoff of PSG. (See Making Sense of HP's Mobile Mess, HP: Tablet Effect Is Real and HP Shuts Down WebOS Device Biz.)

HP will make a decision about how to spin off or sell PSG by end of year based on value to investors and customers, she said. At the same time, the company will "continue to explore options to maximize the value of webOS software."

"The best thing we can do is get to a decision on PSG as fast as possible," she said. "This decision -- it's not like fine wine. It won't get better with age."

As part of the executive shuffle, Chairman Ray Lane will become executive chairman of the board of directors, and the board will appoint a lead independent director. Lane spent most of the call defending HP's board and their CEO search, and arguing to investors that HP doesn't need to be "transformed."

"We think we can build a hell of a business out of it," Lane said, referring to HP hardware, "but it has nothing to do with transforming. We'll see more software and more value-added services, but we have $120 billion of hardware business that we care deeply about."

Whitman and Lane's primary message, which Whitman drove home several times on the call and in her statement, was that "HP matters -- it matters to Silicon Valley, California, the country and the world." But, to investors, what matters the most now is what she decides do with it.

"We think ... uncertainty about its PC strategy undermined customer and partner confidence in HP's PC business and in its hardware business as a whole," wrote Technology Business Research Inc. (TBR) Analyst Krista Macomber in a research note Thursday. "We believe assuring customers it will retain and nurture its PC business is HP's most logical and likely course of action."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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