In a research report distributed ahead of Tuesday's HP analyst meeting, Milunovich recommended the company be split by product segments into printers and computers or by market into consumer and enterprise.
''We suggest the printer/consumer side keep the HP brand name. Consumers, which as an amalgam of brands already is likely to make acquisitions, could use a fresh identity,'' Milunovich wrote in the report co-authored by Merrill analyst Richard Farmer.
Milunovich, who created a stir last October when he called on Sun Microsystems to cut its focus or be acquired, said the HP/Compaq merger was ''not a sufficient move to make computers competitive.''
''Our strong intuition is that shareholders will benefit by HP eventually breaking up. Unlike IBM, HP has distinct businesses'' that could perform better if operated separately.
''Management, however, shows no interest in breaking up. No doubt it would say there are synergies, especially in distribution, between PCs and printers and even printers and enterprise computing. But, as much as the company would argue that its divisions are separately run and optimized, we don't fully believe it,'' Milunovich said.
The report acknowledged that breaking up an $80 billion company was a ''complicated problem,'' but suggested printers could be spun off successfully.