Categories: CloudWorkspace

HP Reportedly Revives Breakup Plan

HP is to split into two companies, one focusing on PCs and printers and the other selling enterprise hardware and services, in a plan that could be announced as early as Monday, according to reports.

The plan resembles a 2011 scheme under which then-chief executive Leo Apotheker would have sold off HP’s PC business, allowing the company to focus on software. HP’s acquisition of UK analytics firm Autonomy for $10 billion (£6.2bn) was a key part of that plan, which was jettisoned by Meg Whitman when she took over as chief executive in September of that year.

Stock redistribution

In 2012, Whitman combined HP’s struggling PC business with its more profitable printer unit, paving the way for the current plan. The deal, which would take the form of a distribution of shares to stockholders next year, would create two publicly traded companies, each with more than $50bn in annual sales, according to a report by the Wall Street Journal, which first disclosed the news on Sunday.

Whitman would be the chief executive of the enterprise hardware and services company, HP Enterprise, and chairman of the PC and printer company, called HP Inc., according to the report, which cited unnamed sources familiar with the plans. Current lead independent director Patricia Russo would be chairman of the enterprise company, with executive Dion Weisler to take over as chief executive of the PC and printer business.

HP’s Printing and Personal Systems Group reported $55.9bn in sales for the 2013 fiscal year, about half of the company’s total, a decline of 7.1 percent year-on-year. HP has said it sees stronger long-term prospects in areas such as enterprise hardware, software and services.

Last year HP lost its place as the world’s largest PC maker by shipments, moving to No. 2 behind China’s Lenovo Group.

EMC merger

Three years into Whitman’s term as chief executive, HP has reportedly investigated selling off parts of its business, and discussed a merger with EMC. The break-up, while it would weaken HP’s negotiating power with suppliers by creating two companies with less scale than the current one, could allow the enterprise business to merge with EMC.

HP has approached both Lenovo and Dell about a sale of its PC business, according to sources cited by industry journal Re/Code.

The company is expected to discuss the plans at a Wednesday meeting with financial analysts in San Jose.

An HP spokeswoman declined to comment on the reports.

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Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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