Silicon Valley stalwart Hewlett-Packard splits into two divisions

Hewlett-Packard is to split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations.
By The Newsroom
Published 6th Oct 2014, 18:28 BST

HP said its shareholders will own a stake in both businesses through a tax-free transaction next year. Each of the two businesses contribute about half of the group’s current revenue and profit.

The move will result in a monumental reshaping of one of technology’s most important pioneers, founded in 1939, which has more than 300,000 employees.

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“Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates,” said Ralph Whitworth, former HP chairman.

Many investors and analysts had called for a break-up of the company, or a sale of the personal computer business, so that HP could focus on the more profitable operations of providing computer servers, networking and data storage to businesses.

HP is the latest in a line of companies, often under shareholder pressure, to spin off operations in an attempt to become more agile and capitalize on faster-growing businesses. Online auction company eBay Inc said last week it would spin off its electronic payment service PayPal.

Hewlett-Packard’s current chief executive, Meg Whitman, will lead the new Hewlett-Packard Enterprise, which will house the corporate hardware and services operations with current HP lead independent director Patricia Russo its chairman. HP’s printing and personal computing business, to be known as HP Inc, will be led by Dion Weisler, an executive in that division.