Hewlett-Packard (HPQ) to split into two public companies. Stock soars.

Hewlett-Packard (HPQ) said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations. Hewlett-Packard stock jumped 5 percent on the news. 

Paul Sakuma/AP/File
The Hewlett-Packard Co. displayed on a sign outside the company's headquarters in Palo Alto, Calif. Hewlett-Packard Co. (HP) 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, as it aims to drive stronger profitability.

Hewlett-Packard Co (HPQ) said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations.

HP said its shareholders would own a stake in both businesses through a tax-free transaction next year.

Shares of the company, which has struggled to adapt to the new era of mobile and online computing, were up 5.1 percent at $37 in premarket trading on Monday.

Each of the two businesses contribute about half of HP's current revenue and profit.

The move will result in a monumental reshaping of one of technology's most important pioneers, which has more than 300,000 employees and is on track to book $112 billion in revenue the fiscal year ending October.

"Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates," Ralph Whitworth, former HP chairman and founder of Relational Investors LLC, said in a statement.

Relational owns a 1.49 percent stake in HP, which had a market value of about $66 billion as of Friday.

Many investors and analysts had called for a break-up of the company, or a sale of the personal computer business, so that HP could focus on the more profitable operations of providing computer servers, networking and data storage to businesses.

HP is the latest in a line of companies, often under shareholder pressure, to spin off operations in an attempt to become more agile and capitalize on faster-growing businesses.

Online auction company eBay Inc said last week it would spin off electronic payment service PayPal.

WHITMAN TO LEAD ENTERPRISE

HP's current chief executive, Meg Whitman, will lead the new Hewlett-Packard Enterprise, which will house the corporate hardware and services operations.

Current HP lead independent director Patricia Russo will be chairman of the enterprise company.

HP's printing and personal computing business, to be known as HP Inc, will be led by Dion Weisler, currently an executive in that division. Whitman will be chairman of HP Inc.

Founded by Bill Hewlett and Dave Packard in a Palo Alto, California garage in 1939, HP was one of the companies that shaped Silicon Valley and the PC revolution.

Lately, however, it has struggled to adapt to the shift towards mobile computing, and it has been overshadowed by younger rivals such as Chinese PC maker Lenovo, which is now the world's No. 1 PC maker by shipments.

Dell Inc, which is HP's closest U.S. competitor and facing similar pressure, was taken private by founder Michael Dell last year.

HP's PC business has shown signs of life in recent quarters, growing broadly geographically as businesses replace aging machines.

HP on Monday affirmed its fiscal 2014 adjusted earnings of $3.70 to $3.74 per share. It also forecast 2015 adjusted earnings of $3.83-$4.03 per share, in line with the average analyst estimate of $3.95, according to Thomson Reuters I/B/E/S.

HP's announcement on Monday confirmed a report of the split in the Wall Street Journal on Sunday.

Up to Friday's close, HP's stock had risen nearly 26 percent this year. (Reporting by Supantha Mukherjee in Bangalore, David Henry in New York, Edwin Chan in San Francisco and Bill Rigby in Seattle; Editing by Chizu Nomiyama and Savio D'Souza)

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Hewlett-Packard (HPQ) to split into two public companies. Stock soars.
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2014/1006/Hewlett-Packard-HPQ-to-split-into-two-public-companies.-Stock-soars
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe