HP To Split PC And Printer Business Away From Enterprise Products

Hewlett-Packard isn't reverting back to Hewlett and Packard, but the heralded technology company is indeed splitting up this week. HP will become two companies, both of which will be publicly traded Fortune 50 businesses. One will be made up of HP's enterprise technology, while the other will be comprised of its PC and printing businesses (that's the one that'll keep the current HP logo and name).

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 Inc. Today’s announcement comes as HP approaches the fourth year of its five-year turnaround plan, and the move makes a good deal of sense. Enterprise and consumer have grown into two very different beasts for HP, with PC/printing on the decline and enterprise surging. This move could enable the PC/printing side to really focus in on what it needs to do in order to be viable, without having enterprise hanging over.

Said Meg Whitman, Chairman, President and Chief Executive Officer of HP. “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 separation into independent publicly traded companies will provide each company with its own, more focused equity currency, and investors with the opportunity to invest in two companies with compelling and unique financial profiles well suited to their respective businesses.

Meg Whitman, President and Chief Executive Officer of HP, and Cathie Lesjak, Chief Financial Officer of HP, will hold these positions with Hewlett-Packard Enterprise. When the separation is complete, Whitman will also serve on the Board of Directors of Hewlett-Packard Enterprise, and Pat Russo will move from Lead Independent Director of HP to Chairman of Hewlett-Packard Enterprise.

Dion Weisler, Executive Vice President of HP’s Printing and Personal Systems business, will lead HP Inc. as President and Chief Executive Officer. Whitman will serve as non-executive Chairman of HP Inc.’s Board of Directors.

One has to wonder if HP has motives for making the split now (perhaps there's a suitor out there?), and if other monolithic companies will consider following what appears to be a trend lately.