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HP Splits into Two Independent, Publicly-Traded Companies

( [email protected] ) Oct 08, 2014 06:04 PM EDT
On Monday, October 6th, Hewlett-Packard (HP) announced its plan to break up its business into two companies. The first company will sell the HP brand computers and printers, while the other will provide software, servers, storage, and other types of services.
Hewlett-Packard CEO Meg Whitman has said there's renewed interest in traditional PCs over tablets in business. Getty Images

On Monday, October 6th, Hewlett-Packard (HP) announced its plan to break up its business into two companies. The first company will sell the HP brand computers and printers, while the other will provide software, servers, storage, and other types of services.

HP was once number one of the global PC market. As of last year, it was at number two, passed by Lenovo, the Chinese computer company. According to the Wall Street Journal, investors and HP have been contemplating the split into two companies for quite a while.

According to sources at the Wall Street Journal, the current plan is that Whitman will be the chairman for the PC and printer business as well as chief executive of a separate "enterprise company", with board member Patricia Russo stepping in as chairman of this enterprise company. As far as HP's PC and printing business is concerned, Don Weisler, current executive vice HP's printing and personal systems group, will take over this part of the company.

According to Larry Dignan at ZDNet, HP does not have "enough focus on any one area to really dominate". Dignan states that the split could be a good thing, as HP would be two new independent publicly traded companies, with one unit having the option to go private. Dignan also sees HP investing into more research and development spending, which could take the company into entirely different levels of innovation.

Glenn O'Donnell, an analyst at Forrester Research Inc., was also very positive about the company split. "Each of the companies now has more freedom to go off and succeed in its own right. This is a mechanism for each company to focus more attention on the core business."

HP CEO Meg Whitman has stated that "We're gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape". It is reported that HP is seeing a renewed interest in traditional PCs over tablets in the business world, and will definitely target their business to this trend.

HP has actually attempted to split from the PC business before. Back in 2011, a former Chief Executive Leo Apotheker attempted to spin off HP's PC-making division. The move was initially rejected by investors, with Apotheker being forced out in the process. It was current CEO Whitman that actually reversed Apotheker's decision after she took over as CEO. It was in 2012 when Whitman merged the PC and printer businesses.