Hewlett-Packard reversed course on and said it will keep its personal computer division after reviewing a proposal by its former chief executive to spin off the unit.

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 objectively evaluated the strategic, financial and operational impact of spinning off PSG (the Personal Systems Group),” HP chief executive Meg Whitman said in a statement.

“It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders and right for employees,” Whitman said. “HP is committed to PSG, and together we are stronger.”

Whitman took over as HP’s president and chief executive on September 22, replacing Leo Apotheker, who was ousted by the board of directors after less than a year at the helm of the world’s biggest computer maker.

Spinning off the PC division had been proposed by Apotheker, a veteran of German business software giant SAP, as part of a shift towards software and services for businesses.

The low-margin PC market has been flat amid an astronomical increase in powerful smartphones and the arrival of hot selling tablet computers such as Apple’s iPad.

As part of his strategic shift, Apotheker also announced the $10.24 billion purchase of British enterprise software company Autonomy and a decision to stop production of the webOS-powered TouchPad tablet computer, HP’s iPad rival.

HP’s acquisition of Autonomy closed earlier this month.

Whitman declined to reveal what HP planned to do with the webOS operating system it bought with last year’s acquisition of Palm but said HP would make tablet computers powered by Microsoft’s Windows 8 operating system.

“We need to be in the tablet business,” the former eBay chief executive said in a conference call with financial analysts.

Whitman said the company would make a decision on the future of webOS “within the next two months.”

In its statement, HP said the PC unit would be “a key component of HP’s strategy to deliver higher value, lasting relationships with consumers, small- and medium-sized businesses and enterprise customers.”

“As part of HP, PSG will continue to give customers and partners the advantages of product innovation and global scale across the industry’s broadest portfolio of PCs, workstations and more,” said Todd Bradley, the executive vice president of HP’s Personal Systems Group.

“We intend to make the leading PC business in the world even better,” he added.

Bradley, who was also on the conference call, said tablets were helping to usher in a “new age of personal computing” and it was “not too late” to get into the market dominated so far by the iPad.

Shares in the Palo Alto, California-based HP plunged 20 per cent on August 19, the day after Apotheker announced the possible spinoff of the PC unit, and lost 40 per cent of their value during his tenure.

“We confused the market pretty dramatically on August 18,” Whitman conceded.

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