Friday, May 24, 2024

The Big Split: HP Redefines Itself

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Hewlett-Packard (HP) today officially announced its intention to become two separate companies. The move comes as the latest step in CEO Meg Whitman’s multi-year effort to restructure HP and return the tech giant to its former glory. The HP split is currently set to be complete by the end of HP’s fiscal 2015.

The split will see HP Inc. emerge as a company focused on printing and personal systems and will be led by Dion Weisler as President and CEO. Whitman will become the Chairman of the HP Inc Board of Directors. The second company will be named HP Enterprise and will be led by Whitman as President and CEO. Patricia Russo, a former CEO of Alcatel-Lucent, will become the the new Chairman of the HP Enterprise Board of Directors. HP Enterprise will include the company’s cloud, enterprise services, software and financial services lines of business.

“Three years ago this company was in a fairly difficult situation and we needed to rebuild and we needed to do that as one HP,” Whitman said during a morning call with financial analysts.

Whitman noted that things have changed over the last three years, including the speed of the technology market. By having two companies, the goal is to be more nimble to take on new opportunities while being focused on specific areas of technology.

“Make no mistake, one HP was the right thing to do, to begin the turnaround at this company, and now to accelerate into years four and five, this is definitely the right tactic,” Whitman said.

As part of HP’s announcement that it was splitting into two, the company also increased the number of layoffs it is planning. HP now plans of laying off 55,000 employees, a 10 percent increase over the 50,000 employees the company announced it was laying off during its second quarter 2014 earnings call.

Going a step further, even though HP is making the big move of splitting into two, there could be further merger and acquisition (M&A) activity in the company’s immediate future.

“We will be actively looking at M&A probably throughout the year,” HP CFO Cathie Lesjak said. “That then creates situations where we might have material non-public information.”

Whitman added that HP looks for opportunities that are complementary to its existing portfolio that can help accelerate the business.

“This has been a very detailed and thoughtful process about how to roll this out to our many, many constituencies, so I feel really good about our plans,” Whitman said. “Obviously when you make an announcement of this magnitude there may be some challenges and we are all over them.”

Sean Michael Kerner is a senior editor at Datamation and Follow him on Twitter @TechJournalist

Photo courtesy of Shutterstock.

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