Tuesday, 07 October 2014 - 16:54
HP splits into two bodies
Hewlett-Packard is splitting itself into two companies, one focused on its personal computer and printing business and another on technology services such as data storage, servers and software, betting that it can drive faster sales growth with more-focused operations.
Hewlett-Packard, like other PC makers, has struggled as customers shifted toward smartphones and tablets and away from desktops and laptops. It also has been shifting its services business toward cloud computing opportunities as fewer customers opt for traditional data storage. The company has posted revenue declines in 11 of the past 12 quarters and laid off tens of thousands of people in recent years as it attempts to cut costs.
HP hopes that the two units will be worth more separately and be able to grow more quickly apart than they can together.
The planned breakup follows other big companies that have spun off business units in order to drive growth. EBay Inc. last week said it would spin off its fastest-growing segment, payment service PayPal, into a separate publicly traded company.
HP first considered breaking off its PC unit back in 2011, but decided against it. CEO Meg Whitman, who has been leading the company’s turnaround for the past three years, said Monday that HP has now shored up its business enough to support the split.
“The best tactic to continue the turnaround journey is to position HP as two great new companies,” she said in an interview with CNBC.