Business

HP Announces Plan To Split Company

After rumors surfaced Sunday about Hewlett-Packard splitting into two companies, officials confirmed the move Monday.

HP Announces Plan To Split Company
Getty Images / Justin Sullivan
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Monday morning officials from information technology corporation Hewlett-Packard announced it will split into two companies. 

CNN: "The hope would be that each one of those separate companies would be more nimble and more able to respond to market vagrancies."

According to the press release, HP will separate its computer and printer businesses, HP Inc., from the hardware and service operations, Hewlett-Packard Enterprise. 

The split will look something like this: Current CEO Meg Whitman will become CEO of Hewlett-Packard Enterprise; she will also be chairwoman of HP Inc. Patricia Russo, current lead independent director, will become the chairwoman of Enterprise, while current PC/printer exec Dion Weisler will become the CEO of HP Inc. 

The Wall Street Journal first broke the story Sunday, noting the moves comes "amid a wave of breakups and spinoffs at technology companies and in the wider corporate world, underpinned by the idea that companies with a narrower focus perform better."

Right now, it's too soon to tell what the separation will mean for the future of HP, but some media outlets think they know what's going on. 

A writer for Forbes speculated the PC/printer side will be the more successful of the two. However, "Neither of these businesses are leaders in their industries. But HP is in a worse position when trying to sell to businesses than it is in going after consumers."

As of now, China's Lenovo Group is the world's No. 1 PC vendor, with HP falling into second place. 

In the beginning, at least for shareholders, the change will have little effect on HP's value — unless, of course, the split is successful in boosting the company to its previous spot as the world's No. 1 PC vendor. (Video via Hewlett-Packard)

As for what the separation could mean for the company itself, a business professor told Bloomberg"It is a little troubling to see Whitman split her time between a full-time job as CEO of the enterprise business and time-consuming duties as chairwoman of the legacy business that will require a lot of attention at the strategic level." 

But in an interview with CNBC, Whitman expressed her excitement and confidence in the company's decision. 

"More focus, more agility, tying rewards to results we think is going to make a big difference in propelling us to the next level of our journey in the turnaround. So we're really so pleased of where we are today." 

According to a report from The Wall Street Journal Monday, HP "will make the split through a tax-free distribution of shares to stockholders by November 2015. If the division goes off as planned, it would give rise to two publicly traded companies, each with more than $50 billion in annual revenue."

This video includes images from Getty Images.