Hewlett-Packard (HP) splits into two companies

Hewlett-Packard, a pioneer in business computers, on Monday announced plans to break into two parts as it separates its personal-computer and printer businesses from its technology services.

The company, which has been undergoing a multi-year restructuring, said the PC and printer business will use the name HP Inc. The services business will take the name Hewlett-Packard Enterprise.

HP CEO Meg Whitman will lead the Enterprise business. HP PC and printer chief Dion Weisler will be CEO of HP Inc. Current lead independent director Patricia Russo will be chairman of the Enterprise unit, Hewlett-Packard announced.

An HP breakup, which had been under discussion for more than a year, would follow recent corporate splits as companies aim to satisfy shareholders by sharpening their focus. On Tuesday, online-auction giant eBay said it was spinning off its PayPal payments-processing unit.

“The decision to separate into two market-leading companies underscores our commitment to the turnaround plan,” Whitman said in the announcement. “It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders.”

“The major benefit I see in the move is that the enterprise business will have a singular focus on the data center, and the PC and printer business can be a lot speedier and agile,” said Patrick Moorhead, president of Moor Insights & Strategy, a tech analyst firm. He said HP will need to ensure its PC and printer business has enough cash to compete in both the consumer PC and emerging smart home markets.
HP, founded 75 years ago in a garage in Palo Alto, Calif., where it’s currently based, has been trying to reverse sagging sales as it faces tough competition from Oracle and IBM. In 2012, under Whitman’s leadership, it merged its PC business with its more lucrative printer one.
It has also been cutting costs and laying off tens of thousands of employees. And as more computing moves to mobile devices, Whitman has tried to steer HP’s business into the growing demand for cloud-computing systems.
In August, HP reported good news: a sales uptick. It said a resurgence in PC shipments helped boost its year-over-year revenue 1% to $27.6 billion. Its Personal Systems group, which includes PCs and notebooks, grew 12% in that time.
Desktops accounted for about 40% revenue of HP revenue as consumers seek out larger computer screens for more more sophisticated tasks they cannot do on tablets.
In the last year, HP also held talks to merge with data-storage giant EMC Corp., but the Journal said those negotiations recently ended because of lack of shareholder support.