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HP eyed breaking up 3 times Each time, board decided against it

SAN JOSE, Calif. -- Hewlett-Packard Co.'s board considered on three occasions whether to break up the company, but each time directors unanimously concluded it would be best to keep HP together, chief executive and chairman Carly Fiorina said yesterday.

Fiorina, who spoke at a financial analyst meeting in Boston, did not say when directors at the Palo Alto, Calif.-based computer giant debated a breakup. Her remarks came in response to a question by Merrill Lynch technology analyst Steven Milunovich, who asked whether breaking up the company would provide greater returns to shareholders.

HP's current business operations encompass laptops and servers, business consulting services, and printers and ink -- by far the company's most lucrative division. Wall Street analysts have speculated that spinning off the printing division could be a windfall for stock owners and senior executives on both sides of the company.

But Fiorina said the company would incur ''real costs" if it broke up, and the complicated process could drag on for years.

HP's 1999 spinoff of Agilent Technologies Inc. set a record as the largest initial public offering in Silicon Valley at the time. But the complex move was technically only completed three months ago, Fiorina added.

Chief financial officer Bob Wayman also speculated that a breakup could create ''diseconomies" of scale -- the opposite goal of large corporations, which often acquire complementary companies and rivals to spread out marketing, personnel, and other fixed costs.

HP acquired Compaq Computer Corp. in 2001, when executives at both companies promised that the resulting economies of scale would reduce costs and boost profits.

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