HP Won't Finalize PC Spin-Off Until End of 2011

Industry insiders have backed up CEO Meg Whitman's prediction that any kind of spin-off won't be finalized until the end of the year.

Unnamed sources from "upstream suppliers" report that HP won't finalize any kind of spin-off company of its Personal Systems Group (PSG) until the end of the year, backing up a statement made last week by the new CEO, Meg Whitman. Sources state that HP will continue to serve as the world's top notebook vendor in 2012, with 40 million units expected to ship next year.

However right now HP is struggling to "revive morale" among its employees due to the recent changes and the company’s uncertain future. All the talk and speculation about HP spinning off the PC division as a separate entity has reportedly hurt sales across the United States and Europe -- HP's two main markets -- with notebook shipments this year only averaging around 37 to 38 million units.

But if HP's decision to halt TouchPad development, throw webOS into limbo and launch an external PC division wasn't enough to cause investors anxiety, former CEO Leo Apotheker has recently been replaced by Meg Whitman. Sources note that this change in power indicates that the company's board didn't agree with Apotheker's spin-off plan, yet Whitman has now vowed to continue the former CEO's strategy.

"With regard to the potential spin off of PSG, we're committed to doing the work right now to determine the best path forward and we expect the board to make a determination by the end of the calendar year if not sooner," Whitman promised last week in a conference call. "This decision is solely based on the value to investors and value to customers."

But because of the previous clash between the board and Apotheker, there's some uncertainty amongst suppliers whether the company will continue as planned, or keep the PC division within the HP collective. HP is seemingly struggling to find its footing after the TouchPad blunder, enough so that the company feels that it needs to somehow boost morale amongst its workers, to assure them of a bright future (and a steady paycheck).

According to reports, nearly 50-percent of the company's 2012 volume will be supplied by Quanta Computer. HP is reportedly cutting back the number of orders it typically sends over to Flextronics and Foxconn Electronics (Hon Hai Precision Industry), and sending them over to Quanta and Wistron instead.