Jack Clark San Francisco
HEWLETT-PACKARD (HP) was well on its way to splitting into two separate companies around November 1, chief executive Meg Whitman told shareholders at the company’s annual meeting.
One of the companies will be named HP Enterprise and will focus on supplying businesses with software, services and hardware, and be led by Whitman. The other, HP Inc, will sell personal computers and printers to businesses and consumers, and be run by Dion Weisler.
California-based HP was instrumental in making Silicon Valley a major technology hub. Now it is breaking up to become more responsive to corporate customers. HP Inc would trade under the stock symbol HPQ, while HP Enterprise’s ticker would be HPE, Whitman said.
Stock held by HP shareholders would be converted into shares of both companies using a yet-to-be-disclosed ratio at the time of the separation, Whitman said.
Initially, the company anticipated that the sum of the dividends paid by both stocks would equal the current dividend, with a higher proportion coming from HP Inc.
Post-split, HP will divide buildings at its Palo Alto campus to serve as twin headquarters. “As we go around the world each location will be divided between HP Inc and HP Enterprise,” Whitman said.
Splitting the company would create two firms with radically different characteristics. This would require new company directors with “helpful domain expertise”, Whitman said.
Twin challenges
Half of HP Inc’s performance will depend on the health of its personal computer business, where sales have been under pressure for several years as consumers in emerging markets embrace mobile devices instead of PCs. The rest will depend on the continued health of the printer division, which faces its own risks as more paperwork becomes digitised.
HP Enterprise faces other challenges, as corporate customers move away from buying traditional hardware and software, and on to systems that let them rent or licence software and hardware via the internet.
– Bloomberg