Last week’s shock announcement that HP was to sell off its PC business and dump its WebOS devices was received positively by the markets, and the company’s share price spiked on the announcement.

But there’s a long way to go before the announcement turns into reality, with PSG accounting for a massive part of the HP business – and almost one-third of its 300 000 employees.

It’s still not clear whether HP will sell its PSG division off, or spin it out into a separate company, but is has opened the door for discussions.

PSG is the leading manufacturer of personal computers in the world and had annual revenues of about $41-billion in fiscal year 2010.

The move to unbundle the PC business is part of HP’s plan to fundamentally transform the company by focusing its investments, resources and management attention to drive higher value solutions to enterprise, small and midsize business and public sector customers.

The company believes 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.

“The exploration of alternatives for PSG demonstrates our commitment to enhancing shareholder value and sharpening our strategic and financial focus,” says Léo Apotheker, HP president and CEO. “In March we outlined a strategy for HP, built on cloud, solutions and software to address the changing requirements of our customers, shaped heavily by secular market trends that are redefining how technology is consumed and deployed. Since then, we have observed the acceleration of these market trends, which has led us to evaluate additional steps to transform HP to meet emerging opportunities. We believe the acquisition of Autonomy, combined with the exploration of alternatives for PSG, would allow HP to more effectively compete and better execute its focused strategy.”

The PC market is quickly evolving with new form factors and application ecosystems. Given these realities, HP believes it is in the best interests of the company and its shareholders to explore ways for PSG to position itself to address these rapid changes and maintain its technological and market leadership positions.

“We believe exploring alternatives for PSG could enhance its performance, allow it to more effectively compete and provide greater value for HP shareholders,” says Apotheker. “PSG is a world-class scale business with a leading market share position and a highly effective supply chain and broad reach and go-to-market capabilities. We believe there are alternatives that could afford PSG more autonomy and flexibility to make strategic investment decisions to better position the business for its customers, partners and employees.”

As a next step, HP and its advisers will explore strategic alternatives, including the exploration of the separation of its PC business into a separate company through a spin-off or other transaction that would likely be tax-free to US shareholders. HP expects that the process could be completed within about 12 to 18 months.

Apotheker adds: “As we explore alternatives for PSG, we will be focused on a path that not only enhances value for HP shareholders but also provides greater opportunities for our people, businesses, partners and customers. While this process is underway, we will remain focused on operating our businesses. The strength of PSG is a testament to our world-class team of employees and reflects their commitment to innovation and customers and partners.”