HP Splits into Two Companies

Oct 07, 2014

Enterprise giant frees itself from ink and home PCs (and visa versa).

HP CEO Meg Whitman has confirmed the rumor that the company is planning on splitting into two different companies. According to the announcement, the server, storage, software, and corporate services division will split into a separate company known as HP Enterprise. The PC and printer division, which will primarily server the consumer sector, will also fend for itself and retain the name HP Inc. Whitman herself will stay on as CEO of HP Enterprise, and the current PC and printer exec Dion Weisler will become the CEO of HP Inc.
The announcement is especially surprising (or some might say ironic?) considering the row that started when former CEO Leo Apotheker announced plans to spin off the PC and Printer business three years ago. At the time, the outrage resulting from the announcement of a split caused a board room coup that eventually brought Whitman to power.
Still, Whitman claims that her complete change in viewpoint results from real considerations. She says the company has “… considerably strengthened our core businesses to the point where we can more aggressively go after the opportunities created by rapidly changing market.” What she didn't say is that the PC market has deteriorated significantly since the last time, and HP knows it needs a bigger piece of the tablet and mobile business to survive in the consumer space. Another phenomenon coming into the foreground is 3D printing. The company knows it needs a piece of the 3D printing action if it is going to prolong its reign as the king of printers.
It is also possible the board and shareholders like this deal better than the last one – Apotheker was talking about selling the PC and printer division – Whitman has apparently worked out an arrangement where the company will split like an amoeba, with current shareholders owning shares in both companies and both sides retaining their independence.
Apotheker’s reflections on the plan are not known at this time. It would not be surprising if he feels a sense of vindication for knowing the company was getting too big and ungainly to react to the changing market. Part of his problem was that he shocked everybody and they freaked out; but still, politics is part of the job description of any corporate CEO, and in that sense, the present proposal looks a lot better to the world than Apotheker’s unexpected fire sale.  

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