HP move to keep PC business a positive: analysts

Hewlett-Packard Co's about-turn on spinning off its PC business is a step in the right direction for the company, but the decision hardly came as a surprise, said Wall Street analysts on Friday.

HP, under the leadership of its new Chief Executive Meg Whitman, on Thursday said it had decided against spinning off its Personal Systems Group, which would have cost billions of dollars in expenses and lost business.

"We think the decision is a solid step forward for HP... The announcement to keep the business is a sign of sound strategic decision-making returning with new leadership," J.P. Morgan Securities analyst Mark Moskowitz wrote in a note to clients.

Analysts were upbeat about HP's decision to keep its PC business -- which accounts for about 31 percent of HP's revenues -- as a spin-off would have been both difficult and costly.

"We are glad to see HPQ come to a conclusion sooner than later as this should help remove the uncertainty around the business," analyst Shaw Wu at Sterne, Agee & Leach said.

The decision to review the PC business was part of former CEO Leo Apotheker's sweeping strategy that was not welcomed by investors.

The former SAP CEO was fired last month after he angered investors with his over $10 billion purchase of British software company Autonomy and struggled to halt a 50 percent plunge in HP's share price.

Analysts at Barclays Capital said while they expected HP to do an about-turn on its plan to spin off the PC business, they saw this as the right decision for the company.

"Unlike IBM, we think, HP is not ready," Barclays analysts said. HP's services and software strategies are still "immature" and not ready to shoulder the burden of driving the sales process at the company, they added.

According to Thomson Reuters' Starmine data, at least 10 analysts rate HP stock a "buy" or its equivalent rating, 20 rate it a "hold," and 5 rate it a "sell."

Shares of the company were marginally up in pre-market trade. They had closed at $26.99 on Thursday on the New York Stock Exchange.

(Reporting by Himank Sharma in Bangalore; Editing by Joyjeet Das)