The Cloud

HP Announces Historic Breakup

Splitting off the PC and printer businesses will give the enterprise division "focus, financial resources and flexibility," says CEO Meg Whitman.
Matthew HellerOctober 7, 2014
HP Announces Historic Breakup

Hewlett-Packard is splitting up into two separate, publicly-traded companies, a historic move for the Silicon Valley institution that it said was part of CEO Meg Whitman’s five-year turnaround plan.

Whitman will lead the new Hewlett Packard Enterprise, which will sell business technology, including computer servers and software to corporations, while hardware chief Dion Weisler will be CEO of HP Inc., which will consist of the PC and printer businesses.

HP announced the long-rumored breakup Monday, with Whitman saying the past three years of turnaround efforts had “significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market.”

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“The decision to separate into two market-leading companies underscores our commitment to the turnaround plan,” she said in a news release. “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 turnaround plan has had mixed results and Whitman previously had resisted the idea of splitting up the company. “The severity of the plan … underscores deep-seated concerns about HP’s long-term future amid stagnant sales and [what] some call outdated products and services,” USA Today said.

The New York Times noted that other tech stalwarts like Microsoft, IBM and Dell have recently changed chief executives, sold large parts of their businesses or gone private. “All of them, along with a host of other companies that became behemoths during a 20-year boom in personal computing and the Internet, are rushing to cope with the rise in mobile devices connected to cloud systems,” it said.

HP expects the split to be completed by the end of fiscal 2015. The tax-free transaction will provide HP shareholders with shares of both Hewlett-Packard Enterprise and HP Inc.

“This is a defining moment in our industry as customers are looking for innovation to enable workforces that are more mobile, connected and productive while at the same time allowing a seamless experience across work and play,” Weisler said.

HP stock closed up 1.6% at $36.84 in trading Monday.

Featured photo: Max Morse, Wikimedia Commons, CC BY 2.0

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