HP has confirmed the industry’s worst kept secret – since yesterday anyway – that it is to carve the business in two, with printers and PCs on one side and all things enterprise on the other.
This is a massive U-turn by CEO Meg Whitman, who has claimed repeatedly the organisation would not be split – as had been imagined by her predecessor Leo Apotheker – ever since she took over the top job.
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Whitman will be CEO and president of HP Enterprise, housing the server, storage, networking, converged systems, services and software units. PC and Printer boss Dion Weisler is to be made CEO of HP Inc, and Whitman will be non-exec chairman at the business.
Both businesses will trade on NYSE when the transaction closes by the end of HP’s fiscal 2015 (November next year), and HP shareholders will own shares in the two entities, the company said.
The separation transaction is intended to be tax-free to HP shareholders for federal income.
In a canned statement, Whitman claimed:
Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by rapidly changing market.
She added the split would provide the companies with the “independence, focus, financial resources, and flexibility they need to adapt to market and customer dynamics, while generating long-term value for shareholders”.
The company also said the divorce will provide “additional resources, and a reduction of debt at the operating company level”, which could be used to underpin investment across the portfolio.
Whitman admitted at the recent Canalys Channels Forum that HP has “missed” technology trends. She was most likely referring to the tablet and smartphone market, where the firm has lost ground to Apple and Samsung. In PCs, HP conceded the market lead to Lenovo last year.
In a statement, Weisler said an independent HP Inc can make a splash in emerging market such as 3d printing and in “new computing experiences”.
The guidance for fiscal ’14 is unchanged. ®