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Latest News

HP Split Into Two

5000 Employees Loses Job

 

Hewlett-Packard Co. said it would split into two listed companies, separating its computer and printer businesses from its faster growing corporate hardware and services operations, and eliminate another 5,000 jobs as part of its turnaround plan.

HP said its shareholders would own a stake in both businesses through a tax-free transaction next year. Each business contributes about half of HP’s revenue and profit.

Chief Executive Meg Whitman told Reuters the newly created HP Inc. would mostly stick to its knitting PCs and printers for now, while exploring related markets such as 3D printing.

The company has no plans to venture into the hotly contested consumer mobile devices market, where it stumbled years ago. “There’s still lots of opportunities in other adjacencies, where we don’t chase the market leaders,” said Whitman, who will be the CEO of HP Enterprise, the business that will sell computer servers and networking gear and data storage to businesses.

Whitman said HP’s balance sheet had improved markedly over the past few years, allowing the company to come to the decision to split up from a position of strength. “This would not have been possible three years ago,” she said, referring to a proposal to spin off PCs in 2011.

HP said it planned to cut 5,000 more jobs as part of its multiyear restructuring, raising the total under Whitman to 55,000. The company has more than 300,000 employees.

The separation will result in a fundamental reshaping of one of technology’s most important pioneers, which is on track to generate $112 billion in revenue in the fiscal year this month.

HP is the latest in a line of companies to spin off operations in an attempt to become more agile and capitalize on faster growing businesses.

Some analysts expressed skepticism about the latest move. Barclays analysts noted that the sudden announcement in 2011 was disruptive to HP’s sales, its sales force and demand. “If the decision by HP isn’t well communicated or is not well executed, the negative share shifts could be material,” they said in a note.

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