adminSan Francisco. – Hewlett-Packard is splitting into two companies, using a breakup to become nimbler after failing to keep up with the shift away from the printing and personal-computing businesses it pioneered.
Chief executive officer Meg Whitman will lead Hewlett-Packard Enterprise, a new company focusing on corporate hardware and services, while Dion Weisler, the vice president in charge of personal-computer and printer operations, will become CEO of that business, called HP Inc, Hewlett-Packard said in a statement yesterday.
Whitman is reversing an earlier position that the company should remain a single enterprise. When she took the helm in September 2011, as the fourth CEO in 2 1/2 years, she ended plans by her predecessor to spin off the PC unit.
Hewlett-Packard, which had set the pace in computers for decades, had embarked on a rapid expansion plan through acquisitions – some of them controversial – followed by tumultuous years of strategy shifts, cost cutting and reduced profit targets. Now Whitman is pursuing the kind of spinoff plan that’s gathering steam at other technology companies.
“HP’s board and management have made a brilliant value-enhancing move at the perfect time in the turnaround,” said Ralph Whitworth, a former Chairman of HP’s board and an activist investor, in a statement.
“Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates.”
Whitman had a stake in Hewlett-Packard of about 1,5 percent as of June 30.
Last week, EBay Inc. announced that it would spin off its PayPal unit. EMC Corp, a maker of storage computers, is exploring strategic options that could include a full or partial sale, or a spinoff of VMware Inc., and has also held merger talks with Hewlett-Packard, people familiar with the matter have said.
International Business Machines Corp has been shedding its hardware operations, including selling its PC unit to Lenovo Group Ltd. (992) in 2005 and its low-end server unit to the Chinese company this year.
Hewlett-Packard’s breakup will be a tax-free distribution of shares to shareholders. Whitman will also become chairman of the PC and printer company, while current lead independent director Patricia Russo will be chairman of the enterprise unit, Hewlett-Packard said.
Planned job cuts will increase to 55 000 and costs to restructure cost will be about $600 million. That’s compared with as many as 50 000 previously projected, Hewlett-Packard said in a presentation yesterday.
The shares rose 4,5 percent to $36,77 in at 9:33 a.m. New York time. They had gained 26 percent this year through October 3, after almost doubling in 2013.
Leo Apotheker had succeeded Mark Hurd, who left in August 2010 after the board said Hurd violated Hewlett-Packard’s code of business ethics. The company has fallen behind in mobile computing at a time when consumers have migrated to smartphones and tablets, and last year lost its place as the largest maker of PCs to Lenovo.
Under Apotheker, Hewlett-Packard acquired UK software company Autonomy Corp, a deal that resulted in the company taking a $8,8 billion writedown in 2012 and mired the company in lawsuits to this day. Apotheker had succeeded Mark Hurd, who left in August 2010 after the board said Hurd violated Hewlett-Packard’s code of business ethics.
Carly Fiorina, Hurd’s predecessor and the first outsider hired for the CEO job, in 1999 sold Agilent Technologies Inc (A), the electronic instruments division closest to the company’s roots. Two years later, Hewlett-Packard bought Compaq Computer Corp, the PC manufacturer. – Bloomberg.
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