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HP to split into two in bid to stay competitive

Published on Wednesday, 08 Oct 2014
Meg Whitman

Hewlett-Packard plans to split into two companies, becoming the latest technology company to seek a new structure in order to remain competitive. The move will see the loss of 5,000 jobs, bringing to 55,000 the cuts under a multiyear restructuring plan. 

Chief executive Meg Whitman would lead a new company focusing on corporate hardware and services, while Dion Weisler, the vice-president in charge of HP's personal computer and printer operations, would head that business, HP said yesterday. 

By separating HP into two businesses, Whitman is reversing her position that the firm should remain a single enterprise. 

In 2011, the newly appointed chief executive ended plans by her predecessor Leo Apotheker to spin off the personal computer unit.

Efforts to spin off businesses are gathering steam at other technology companies. Last week, eBay announced that it would spin off PayPal. EMC Corp, a maker of storage computers, was exploring strategic options that could include a full or partial sale, or a spin-off of VMware, and had also held merger talks with HP, sources said.

International Business Machines Corp has been shedding its hardware operations, including selling its personal computer unit to Lenovo Group in 2005 and its low-end server unit to the Chinese company this year.

The HP break-up will be a tax-free distribution of shares to shareholders. 

Whitman would also become chairman of the personal computer and printer firm, while lead independent director Patricia Russo would be chairman of the enterprise unit, HP said.

The idea of HP spinning off or separating the printers and personal computer businesses had come up in discussions between EMC and HP, a person familiar with the matter said. 

The idea would have been to have a combined company focusing on areas such as storage, servers, software and security, the person said.

Whitman has been introducing new products and cutting jobs to trim costs since she took over as chief executive in September 2011, seeking to turn around the iconic Silicon Valley company. HP has fallen behind in mobile computing at a time when consumers have migrated to smartphones and tablets. 

HP's printing and personal systems group had US$55.9 billion in revenue in the company's latest fiscal year.


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