HP decides to keep its PC business

 Hewlett-Packard announced Thursday that it will continue selling personal computers after all, reversing an earlier decision to exit one of its core business lines.

It's clear after our analysis that keeping the Personal Systems Group within HP is right for customers and partners, right for shareholders, and right for employees," Meg Whitman said in a written statement. "HP is committed to PSG, and together we are stronger."

The company said it believes the PC business is too ingrained in the company's supply chain and other key HP operations to let it go. Computers also help promote HP's brand, and are a crucial part of the company's "one-stop shop" services that it offers to corporate customers, HP said.

HP's analysis also showed that spinning off the division would be so costly that it outweighed any benefit of dropping PCs.The decision to ditch PCs came two months ago from then-CEO Leo Apotheker, who favored HP's fast-growing, highly profitable software and server businesses over its low-margin computer business. HP's PC unit was one of the industry's most profitable, but the company still only squeezed out about a 5% margin on the devices.

Apotheker also noted that PCs aren't flying off the shelves any more. Mobile devices like smartphones and tablets have begun to eat into PC sales.