HP to Split Into Two Companies in 2015

Posted on October 6, 2014

HP has announced plans to split itself into two separate companies in 2015. The two companies will be named Hewlett-Packard Enterprises and HP Inc. The company expects the split will be completed by November 2015, over a year from now.

Hewlett-Packard Enterprise will offer corporate hardware and software services. This includes the company's OpenStack Helion cloud platform as well as hardware like servers, storage and networking products. Former eBay CEO Meg Whitman will helm the HP Enterprise company. Pat Russo will be chairman of its board.

HP Inc. will be the consumer products division. These products include PCs, printers and 3D printing. Dion Weisler will be the head of this company with Meg Whitman being the chairman of its board.

Whitman, who was initially against an HP split, says in a statement, "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."

The HP split will result in a significant number of layoffs. The Wall Street Journal reports that there will be 55,000 jobs cut. However, 36,000 of these jobs have already been cut through a previously announced restructuring program.

It could be that providing services to both corporate customers and consumers has become an increasingly difficult proposition. There are many companies that do both, but the benefits to doing both (such as reduced costs) may be eroding.

UBS analyst Steven Milunovich told Reuters, "We like the spin and believe it could create additional value over time. In our view, focus is more important than synergies, and it is hard to be good at both consumer and enterprise computing."

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