Hewlett-Packard has officially announced its intention to split into two separate companies. Hewlett-Packard Enterprise will focus on products and services for businesses with Meg Whitman (photo ©Max Morse) as CEO, thus maintaining the role she has in the current company. HP Inc. will be the company that will focus on personal computers and printers with Dion Weisler as CEO and Meg Whitman as chairman of the board.
This split is an idea that was proposed for the first time in 2011 by the then CEO Leo Apotheker. It was the most difficult period in the history of Hewlett-Packard, so much that Apotheker was fired less than a year after his appointment.
Meg Whitman decided to keep the company united but lately the shareholders pushed very hard for the split. That’s a very strong trend in recent times for big companies and the same reason why eBay recently announced PayPal’s spin-off. Companies more focused on specific activities allow shareholders to more easily find new ways to increase its value.
This split is in the company’s plans the final solution for its revival after the many disappointments of recent years with the turnover of several CEOs. Two companies should be able to focus their resources on different markets with greater efficiency.
The operation should be completed by the end of fiscal year 2015 with a distribution of tax-free shares. In practice, Hewlett-Packard’s shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc. at the end of the transaction.
The first reaction at Wall Street was positive, with an increase in the HP’s share value up to 7%, confirming the tendency to splitting large companies. What is the future of the two new companies? In the meantime, the layoffs that have been planned for some time will go on for a total of 55,000 people, 5,000 more than was initially planned. Therefore, no new jobs will be created, at least in the near future.
There are many doubts about the future of the two new companies because they could be considered interesting for possible acquisitions. It’s really too early for anything more than speculation but this split may be the last hope for Hewlett-Packard to return to success and avoid disappearing.
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