Hewlett-Packard (HPQ) Shares Higher as Sale of PC Unit Reconsidered
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Hewlett-Packard Co. (NYSE: HPQ) shares are trading higher Wednesday morning as the company might reconsider spinning-off it's PCG unit.
According to the Wall Street Journal, an H-P spokesperson has said analysis of the cost to implement such a move "is underway now."
Data shows the PCG unit added $40.1 billion in revs and $2 billion in operating profit in its last fiscal year. Not only that, but separation of the PCG unit would give Hewlett-Packard less buying power with component makers given a reduction of economies of scale. Hewlett-Packard's supply chain could be disrupted, and profits on some products could be lost.
Serving on Hewlett-Packard's Board since January, Whitman original approved the measure.
Looking to International Business Machines (NYSE: IBM) might provide some insight for what Hewlett-Packard might be up against. IBM said server profit margins fell after it exited the PC business. Recent data has Hewlett-Packard selling 14.9 million PC's worldwide, compared with just 720,000 servers.
But all is not bleak. One scenario paints Hewlett-Packard and an independent PC company joining up to buy components together, meaning Hewlett-Packard might still get bulk discounts.
Hewlett-Packard shares are 1 percent better early Wednesday.
According to the Wall Street Journal, an H-P spokesperson has said analysis of the cost to implement such a move "is underway now."
Data shows the PCG unit added $40.1 billion in revs and $2 billion in operating profit in its last fiscal year. Not only that, but separation of the PCG unit would give Hewlett-Packard less buying power with component makers given a reduction of economies of scale. Hewlett-Packard's supply chain could be disrupted, and profits on some products could be lost.
Serving on Hewlett-Packard's Board since January, Whitman original approved the measure.
Looking to International Business Machines (NYSE: IBM) might provide some insight for what Hewlett-Packard might be up against. IBM said server profit margins fell after it exited the PC business. Recent data has Hewlett-Packard selling 14.9 million PC's worldwide, compared with just 720,000 servers.
But all is not bleak. One scenario paints Hewlett-Packard and an independent PC company joining up to buy components together, meaning Hewlett-Packard might still get bulk discounts.
Hewlett-Packard shares are 1 percent better early Wednesday.
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