PALO ALTO, CA: Hewlett-Packard’s move to split into two publicly traded companies will create additional value for customers and partners, says HP president and CEO Meg Whitman.
Whitman outlined the company’s efforts since 2012 to stabilize HP and return it to growth in a blog post on Monday. Through 2013, the focus was fixing and rebuilding, and this year, the company has been concentrating on recovery and expansion, she wrote.
The next phase of HP’s turnaround effort is all about acceleration.
"By separating, we’ll be able to accelerate the progress we’ve made to date, unlock additional value for our customers and partners, and more aggressively go after the opportunities in front of us," Whitman penned in the blog. "This move will also enable greater speed and agility as we work to meet rapidly changing customer requirements and market dynamics."
The Wall Street Journal broke the news of HP’s split on Sunday, one day before the company was able to make the announcement on its own terms. The separation will create one business for HP’s PC and consumer printer lines, and another for b-to-b services, such as corporate hardware and services operations.
HP confirmed the separation on Monday via press release, explaining that the move will provide each company with its own, more focused equity currency. It will also offer investors the opportunity to invest in two companies with "compelling and unique" financial profiles well suited to their respective businesses, the release states.
In 2011, under previous CEO Leo Apotheker, HP considered spinning off its PC division due to a sharp sales decline caused by a shifting technology landscape, but ultimately decided against the idea due to pressure from shareholders. When Whitman took the helm that same year, she came up with a five-year turnaround plan to save the company’s flagging fortunes.
The decision to split the company has been driven by HP’s belief that customers and partners come first, according to Whitman.
"We’ve intensified our focus on our customers and partners – ensuring that we are the best technology partner in the world, doing everything we can to help our customers succeed," she explained in the post. "Everything we do is with them in mind."
HP’s new companies will include Hewlett-Packard Enterprise, focused on the next generation of infrastructure, software, and services; and HP Inc., a printing and personal systems company, which will retain the current logo.
Whitman will serve as president and CEO of HP Enterprise, and will also serve on the board of directors. Additionally, after the close, HP’s lead independent director Patricia Russo will become chairman of the Enterprise business.
"Hewlett-Packard Enterprise will continue to offer customers unparalleled choices of how to deploy and consume technology, but as a more nimble partner," Whitman blogged. "It will also have greater flexibility to support investments across our portfolio, and to strengthen Enterprise Services’ go-to-market capabilities."
HP’s current EVP Dion Weisler will become president and CEO of HP Inc., with Whitman serving as the non-executive chairman of the company’s board of directors.
The transaction, which is expected to be completed by the end of fiscal 2015, is intended to be tax-free to HP’s shareholders, the release said.
The company was also actively promoting the move on social media on Monday morning.
As part of the multi-year restructuring, HP said it planned to cut 5,000 more jobs, raising the total under Whitman to 55,000.
On Wednesday, HP will discuss the plan in detail at a meeting with financial analysts.
An HP spokesperson was not immediately available to comment on how the split will affect the internal PR team and existing agency relationships.
Last month, HP said it would be shifting all of its communications work to Omnicom by the year’s end, according to media reports. The consolidation includes global duties for HP’s enterprise unit, which Burson-Marsteller has handled for more than 10 years. Porter Novelli CEO Karen Van Bergen leads the Omnicom team, with support from sister firms FleishmanHillard and Ketchum. HP also works with Edelman and W2O Group.
In August, HP reported a 1% increase in year-over-year revenue to $27.6 billion. The company’s Personal Systems group, which includes PCs and notebooks, grew 12% in that time period.
Over the past year, HP has been in merger discussions with data storage giant EMC Corp. – a deal that would result in an industry giant with a market value of approximately $130 billion –but last month, the Journal reported those talks recently ended.
Company stock was up 4.6% in midday trading on Monday, after the separation announcement.
HP’s move follows eBay’s announcement last week that it would be spinning off PayPal into a separate publicly traded business.