Hewlett-Packard said on Monday it prefers to spin off its personal computers unit and is currently working on understanding the larger implications of separating the business from the company.

The world's largest technology company by revenue shocked investors when it announced earlier this month that it is considering strategic alternatives for its Personal Systems Group (PSG) -- which includes PCs -- and would kill its new tablet computer as part of a major revamping away from the consumer market.

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, a HP spokeswoman said. 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.

Some of the alternatives HP is exploring for the PC unit include hiving off the business into a separate company through a spin-off or sale.

HP said the whole process could take 12 months to 18 months, but a final decision on the unit is expected by the end of this calendar year.

The California-based company has been struggling in the PC market -- a low-margin but high revenue business -- as niftier gadgets such as Apple Inc's iPad have lured consumers away.

HP's WebOS-based TouchPad was killed after sales failed to take off. The company is now also exploring options for its WebOS software, which it acquired through the acquisition of Palm.

(Reporting by Poornima Gupta; Editing by Tim Dobbyn)

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