LinuxGram

HP has reversed the unpopular, hastily considered, board of directors-blessed decision to dump its $40 billion PC unit that its now purged CEO Leo Apotheker announced in August.

The company said Thursday afternoon right after Wall Street closed that it would keep the business, expecting it to “deliver greater customer and shareholder value.”

The new decision has the “full support of the board,” a statement that only gives HP’s much vilified board another black eye.

Ostensibly HP did an “objective” evaluation of strategic alternatives for its Personal Systems Group (PSG), an exercise that reportedly involved about 100 “subject matter experts across the businesses and functions,” 18 teams that supposedly looked at all the angles of spinning the unit off.

Under the circumstances one might suspect that the findings were pre-ordained but the investigation reportedly calculated that a spin-out would run about $1.5 billion in start-up costs.

In a statement Apotheker’s replacement Meg Whitman – who, remember, signed off on the August plan – said, “It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees. HP is committed to PSG, and together we are stronger.” A schoolgirl could have figured that out.

Sources have whispered that the only reason HP ever thought about dumping PSG was to cover the $10+ billion it cost to buy the equally unpopular and expensive British ISV Autonomy. There was no one to buy PSG for more than $10 billion and that led HP to fall back on the cover story that it was thinking of spinning the unit out as a standalone company despite the sacrifice of the synergies it gets from the thing.

It is now reckoned that the loss of purchasing power and joint brand opportunities would have cost another billion dollars.

The Wall Street Journal said the total cost of a spin-out was originally only supposed to be $300 million-$400 million. Where that figure dropped from is unclear.

In a press release ahead of a conference call HP said, “The data-driven evaluation revealed the depth of the integration that has occurred across key operations such as supply chain, IT and procurement. It also detailed the significant extent to which PSG contributes to HP’s solutions portfolio and overall brand value. Finally, it also showed that the cost to recreate these in a standalone company outweighed any benefits of separation.

“The outcome of this exercise reaffirms HP’s model and the value for its customers and shareholders. PSG is a key component of HP’s strategy to deliver higher value, lasting relationships with consumers, small and medium-sized businesses and enterprise customers. The HP board of directors is confident that PSG can drive profitable growth as part of the larger entity and accelerate solutions from other parts of HP’s business.”

Todd Bradley, who was on the conference call, will apparently continue to run PSG. Although PSG miraculously lost no market share in Q3, he still has to deal with the August 18 hangover. In answer to a question, Meg said she was confident HP would get its “fair share or more” of disk drives out of poor waterlogged Thailand because of its size and long-term relationships.

Whitman is giving the company another couple of months to figure out what to do with webOS. Apparently it’s seen as some cross-organization something or another but unlikely to return inside a tablet. HP wants Windows 8 for tablets.

HP made back a pittance of its squandered wealth Thursday. Its stock rose to $26.99, up $1.24 or 4.82%, on a day when the market surged. Before the August 18 announcement HP was at $31, down more than a third from its glory days under Mark Hurd.

Meanwhile, Meg – or her people – are trying to reduce the “what is HP” question to a bumper sticker. She said it had to be right because the company will have to execute against it. Before that she’s got to make Q4 guidance. The numbers are due out next month. By then she needs guidance for 2012. She said, “HP tries to do a lot of things.” She, on the other hand, is “a big believer in doing a small set of things really, really well.”