Hewlett-Packard Announces Plans to Split Company As Technology Turns to Cloud

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Researched by Industrial Info Resources (Sugar Land, Texas)--Hewlett-Packard Company (NYSE:HPQ) (HP) (Palo Alto, California) has announced that it will split its company into two separate entities. According to a company filing, HP will separate its personal-computer and printer businesses from its corporate hardware and services operations. The two companies will be publicly traded. The business-focused company will be named Hewlett-Packard Enterprise, while personal-computer and printer business will be called HP Incorporated.

Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Incorporated. Meg Whitman will chair Hewlett-Packard Enterprise, while HP Incorporated. will be managed by Dion Weisler.

"Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market," said Meg Whitman, Chairman, President and Chief Executive Officer of HP. "The decision to separate into two market-leading companies underscores our commitment to the turnaround plan. It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics."

HP has explored splitting in the past under previous executives, but over the past three years, current CEO Meg Whitman has focused on improving the business and cut the costs.

"We believe this is a bold and smart move by HP," said Brian White, technology research head at Cantor Fitzgerald in New York. "In our view, the enterprise IT market is becoming increasingly competitive, and the PC market has been in a downturn since the iPad was unveiled in April 2010, but has shown improved trends this year. Given the challenges in managing a company the size of HP, the negative, long-term secular trends in the PC market that discourage investor attention, and the need for HP to focus more on the cloud, we believe a separation into two companies makes sense, as we have suggested for quite some time."

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