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Hewlett-Packard to split into two, reborn as HP Inc and Hewlett Packard Enterprise

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Hewlett-Packard (HP) will be split into two companies, with its computer and printer business separating from its corporate hardware and services arm.

Updated on 10-06-2014 by Andy Boxall: Hewlett Packard’s CEO Meg Whitman has confirmed the company will become two separate entities by the end of 2015.

Following early rumor reports, Hewlett Packard has confirmed it will split into two firms. The first will be named HP Inc, and will incorporate the PC and printing – including a new 3D printing venture – side of the business, while the second will be called Hewlett Packard Enterprise, concentrating on corporate computing, services, and software. Current CEO Meg Whitman will stay with Hewlett Packard Enterprise, and serve as chairman over at HP Inc, while Dion Weisler will be HP Inc’s new CEO.

In a statement, Whitman says the split will help the company “go after the opportunities created by a rapidly changing market,” and has been made possible by three years of hard work “strengthening its core business.” Whitman claims the transition means the company will, “be in an even better position to compete in the market.” The changeover should be completed by the end of 2015.

Rumors gathered at the last minute

Confirmation came soon after anonymous sources told the Wall Street Journal that HP would split, and an announcement could be made on October 6. The move has apparently been in the pipeline for some time, with CEO Meg Whitman, who’s been in charge at the California-based company since 2011, finally green-lighting the plan.

The split is expected to involve a tax-free distribution of shares to stockholders, the Journal reported. A person with knowledge of the plan said that over the long term the company expects its hardware and services business to perform better than its printer and PC section, and that by separating the units each can be better run.

The massive company still employs more than 300,000 people, though it’s not entirely clear how they are spread among its various operations.

Bill and Dave

HP was founded in 1939 by Bill Hewlett and Dave Packard. The company started life in a Palo Alto garage, a location considered by many as the birthplace of Silicon Valley.

Once at the forefront of the computer revolution, the firm has dealt with tough competition from younger, more innovative rivals, including the likes of Apple, which started out some 35 years after HP (also in a garage, some 10 miles from HP’s).

Trend

HP’s maneuver comes at a time when other big names in the industry have taken similar restructuring steps to streamline business, in a bid to improve performance. For example, eBay recently announced it was planning to spin off its PayPal business.

While HP still pulls in more than $100 billion a year in revenue – an improvement on a few years ago when the company hit particularly hard times – growth has been unremarkable. Following significant job cuts in recent years, the move to split the company in two is HP’s latest effort to boost its business.

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Trevor Mogg
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