Bloomberg News

HP’s Board Is Said to Be Reconsidering PC Spinoff Proposal

September 21, 2011

(Updates share price in last paragraph.)

Sept. 21 (Bloomberg) -- Hewlett-Packard Co.’s board, which is discussing replacing Chief Executive Officer Leo Apotheker, also is reconsidering a proposal to spin off the personal- computer business, a person with knowledge of the matter said.

No decision has been made, said the person, who asked not to be identified because the talks are private. Board members are open to re-examining the plan now because some of them think the separation of the PC unit wasn’t studied as thoroughly as other high-profile spinoffs, such as one by Kraft Foods Inc., the person said.

The directors plan to meet to consider whether to oust Apotheker, less than 11 months after he took the job, two people familiar with the situation said earlier today. Under one scenario, the board may appoint Hewlett-Packard director and former EBay Inc. CEO Meg Whitman as his successor, possibly on an interim basis, one of the people said.

During Apotheker’s tenure, Hewlett-Packard has cut its sales forecasts three times and his strategy shifts have left shareholders doubting his credibility. The company’s stock plunged 47 percent on his watch before today, and “investor exasperation” with management is at its highest in more than a decade, Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., said in a research report last week.

The spinoff would involve Hewlett-Packard’s personal systems group, which includes the PC business. When Hewlett- Packard announced the proposal on Aug. 18, the company said the move wasn’t necessarily a sure thing.

“There can be no assurance that any transaction regarding PSG will be pursued or completed,” Hewlett-Packard said in a statement at the time.

Hewlett-Packard rose $1.51, or 6.7 percent, to $23.98 at 4 p.m. in New York Stock Exchange composite trading.

--Editors: Nick Turner, Lisa Rapaport

To contact the reporter on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net


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