New York - First it was Hanson. Now Google, Alcoa and HP are getting amicable divorces.
Splitting up giant companies into smaller entities was once rare, now it is in danger of becoming a trend.
Hewlett-Packard, the venerable 76-year-old technology giant, began trading as two separate entities yesterday, the culmination of a five-year plan to turn itself around following a period of disastrous acquisitions and what looked like terminal decline. It will now trade as Hewlett-Packard Enterprise, which includes its business data services and software divisions; and HP Inc, which will operate its computer and printer manufacturing and sales business.
The decision to demerge its two distinct business units was taken in 2012 as part of an aggressive de-leveraging, cost-cutting and restructuring programme. Meg Whitman, the former eBay chief executive who ran Hewlett-Packard and will now be chief executive at the Enterprise company, spoke to journalists in New York yesterday after having run the opening bell at the New York Stock Exchange.
She predicted that more companies will do the same thing: “We decided that separation made a lot of sense because the two companies have different products and different customers. We are seeing a lot of companies de-merging and I think this is going to be something we see more of because the world is changing so fast.”
Not only does Whitman see the trend growing as companies seek the ability to move faster, but her business will also seek to cash in.
“We now have a burgeoning separation consultancy business with 400 employees. Splitting HP up was an enormous undertaking, including separating 75,000 email addresses, filing over 300 new tax entities and 2 700 distinct IT systems.”
The separation will leave two companies with a combined market capitalisation of approximately $110bn (£71bn). HP Enterprise will have 252 000 employees globally and annual revenues of $35bn. Whitman also said that the recent layoffs would be “the last restructuring”.
The rebranding did not include changing the name, despite the company's chequered recent past. “Although there have certainly been some challenges at HP over the last decade or so it remains a fantastically powerful brand name. Creating an entirely new brand costs a huge amount. We decided that our name has a huge amount of equity in it and changing it was not a great way to spend shareholder money.”
THE INDEPENDENT