HP to separate into enterprise IT, and PC and printing companies

HP has confirmed plans to split into two separate companies, one focusing on PCs and printers, the other on enterprise computing

HP is to split into two separate companies, one focusing on PCs and printers, the other on enterprise computing.

The move sees the resurrection of the company’s original Hewlett-Packard branding for business technology, with the two new firms adopting the titles HP Inc. and Hewlett-Packard Enterprise. 

Current HP chief executive Meg Whitman will become CEO of the new enterprise company and chairman of HP Inc, with Dion Weisler, chief of HP's Printing and Personal Systems division, as CEO.

Hewlett-Packard Enterprise will be a $58.4bn revenue company, focusing on “defining the next generation of technology infrastructure, software and services for the new style of IT”, according to HP. The firm will sell servers, storage, networking, IT services, software and cloud services.

HP Inc. will have $57.2bn revenue, and will be a “leading personal systems and printing company delivering innovation that will empower people to create, interact and inspire like never before”. It will sell products such as notebooks, desktops, mobile, graphics, printing and managed print services.

"Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market," said Whitman.

"The decision to separate into two market-leading companies underscores our commitment to the turnaround plan. 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. 

"In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders."

HP has had a turbulent time for several years. Whitman was brought in as CEO in September 2011, after the short-lived term of her predecessor, Leo Apotheker. Ironically, one of the reasons Apotheker was sacked was his then unpopular proposal to sell off HP’s PC and printer division.

HP had previously written off almost $9bn of the $13.9bn it spent acquiring outsourcing firm EDS in 2008. In 2012, HP subsequently wrote off a further $8.8bn from the value of its $11.7bn purchase of UK software firm Autonomy.

Also, in 2012, Whitman announced a five-year turnaround plan after HP’s shares plummeted to their lowest level in a decade. The supplier had been criticised for failing to respond to key trends in the IT market such as cloud computing, and Whitman admitted that HP had not invested enough in research and development.

“We have product gaps we simply should not have,” she said.

The turnaround plan has seen thousands of jobs lost at HP. The company now expects 55,000 people to have left the firm, with 36,000 of those already departed.

"Over the past three years, we have reignited our innovation engine with breakthrough offerings for the enterprise like Apollo, Gen 9 and Moonshot servers, our 3PAR storage platform, our HP OneView management platform, our HP Helion Cloud and a host of software and services offerings in security, analytics and application transformation," said Whitman.

Weisler added: "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. 

"As the market leader in printing and personal systems, an independent HP Inc. will be extremely well positioned to deliver that innovation across our traditional markets as well as extend our leadership into new markets like 3D printing and new computing experiences.”

The split into two new companies is expected to be completed by the end of HP’s 2015 financial year.

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