Hewlett-Packard, one of the world's largest IT company as well as the globe's largest PC supplier, said that it would prefer to spin off its personal systems group (PSG) rather than to sell it to a third party.

"We prefer a spin-off as a separate company and the working hypotheses is that a spin-off will be in the best interests of HP's shareholders, customers and employees. However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG business from HP," a spokeswoman for HP told Reuters news-agency.

HP announced earlier this month that its board of directors had authorized the evaluation of strategic alternatives for its Personal Systems Group (PSG), including the exploration of the separation of its PC business into a separate company through a spin-off or other transaction. HP's PSG is the leading manufacturer of personal computers in the world and had annual revenues of approximately $41 billion in fiscal year 2010.

HP is implementing a plan to fundamentally transform the company. An important component of the plan is focusing its investments, resources and management attention to drive higher value solutions to enterprise, small and midsize business and public sector customers. HP believes that the exploration of alternatives for PSG will help the company accomplish its strategic goals and pursue profitable growth and enhanced shareholder value. A post-transaction HP would continue to help its customers manage the information explosion and address their most critical needs through a portfolio that spans printing, software, services, servers, storage and networking.

Even though HP's PSG is the largest supplier of PCs in the world, its business is largely a commodity business, which means low profit margins amid high revenues.

Tags: HP, Hewlett-Packard, Business