HP WILL SPLIT IN TWO, separating its more successful PC and printer businesses from its corporate hardware and services operation into two new publicly traded Fortune 50 companies.
Rather surprisingly, the technology giant won't be naming one half Hewlett and the other half Packard. One side will comprise HP's enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise, and the other will comprise HP's market-leading personal systems and printing businesses, operating as HP Inc. and retain the current logo.
The news was first reported as a rumour on Sunday, but the company confirmed it is to tear itself in half today, a decision is owing to the firm wanting focus on the faster-growing side of the business.
Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP. The transaction is intended to be tax-free to HP's shareholders for federal income tax purposes, HP said.
"Today's announcement comes as HP approaches the fourth year of its five-year turnaround plan. Over this time, the company has executed successfully against its turnaround objectives, keeping customers and partners at the forefront," the firm announced. "HP has reignited its innovation pipeline, strengthened its go-to-market capabilities, rebuilt its balance sheet, and inspired its workforce and management teams. The company is now positioned to accelerate performance, drive sustained growth and demonstrate clear industry leadership in key areas."
Current President and CEO of HP, Meg Whitman, will hold her position with HP Enterprise, but when the separation is complete, Whitman will also serve on the Board of Directors of HP Enterprise. Pat Russo will move from Lead Independent Director of HP to Chairman of Hewlett-Packard Enterprise.
Dion Weisler, EVP of HP's printing and personal systems business, will lead HP Inc. as president and CEO. Whitman will serve as non-executive Chairman of HP Inc.'s Board of Directors.
"HP Inc. will be the leading personal systems and printing company with a strong roadmap into the most exciting new technologies like 3D printing and new computing experiences," the firm, or now firms added.
In August, HP saw its revenue grow for the first time in three years to $27.58bn, helped by stronger than expected growth in its PC division, which grew 12 percent year on year.
The revenue rise was up from $27.23bn in Q3 2013, and up from $27.31bn in the same period last year.
However, despite this growth, profits fell in Q3 2014, dipping under the $1bn mark to $985m. This is down from $1.39bn in the same period last year and $1.27bn in the previous quarter.
At that time, Whitman acknowledged that the demand for PCs was "coming back" despite still being "a declining business".
HP has been strengthening its PC and laptop business of late. Last week it announced several devices on two separate occasions, the HP Slate, which is an Android-powered three-in-one desktop, laptop and tablet, featuring a full HD touchscreen, as well as a line of "thin and light" Stream devices running Microsoft's Windows to rival Google's Chromebooks in the entry-level PC market. µ
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