HP will split into two companies, one focused on enterprise, the other on PCs and printers. The company said Monday the new Hewlett-Packard Enterprise will design and sell next-generation technology infrastructure, software and services, while HP Inc will be the consumer personal systems and printing company. Shareholders will own a stake in both businesses through a tax-free transaction in 2015.
The enterprise company will focus on HP cloud, big data, security and mobility and the new generation of technology and deployment models being driven by these sectors. Cloud computing has brought a great sea change to IT. A general move to cloud and hosted deployment models means legacy technology companies are forced to evolve, often at the displeasure of investors if they are public.
Meg Whitman, who has until now been HP CEO, will be president and CEO of Hewlett-Packard Enterprise and Dion Weisler, who has let the company's printing and personal systems business as executive vice president, will be president and CEO of HP Inc. Whitman will be chairwoman of HP Inc's board and Weisler will be chairman of Hewlett-Packard Enterprise board.
Partitioning HP Enterprise and HP Inc means one's results and potential investor displeasure with them will not affect the other. As a single company, HP had two very distinct identities, which have now turned into two separate businesses, each focused on its unique set of problems.
The impetus for the company split isn't positive, however. HP is approaching the fourth year of a five-year turnaround plan.
The company has once again increased its previously announced layoff plans by 5,000 employees, reaching a total of 55,000. The reduction target has been continuously raised since Whitman first announced her turnaround plan in 2012 and said 27,000 employees would be laid off or sent into early retirement as part of the turnaround.
In her prepared remarks Whitman was as optimistic as ever. “Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market,” she said. “The decision to separate into two market-leading companies underscores our commitment to the turnaround plan.
"It will provide each new company with the independence, focus, financial resources and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders.”
Multi-sided enterprise business
Earlier this year the company consolidated HP cloud play under the Helion brand. It built a cloud services platform called Helion and based on the open source OpenStack architecture.
In addition to its massive traditional server business, HP Enterprise also has a fairly new line of "microservers" called Moonshot. Last week, the company became the first vendor to start shipping servers powered by 64-bit ARM processors (used primarily in smartphones) under the Moonshot brand.
There is also the 3PAR enterprise storage business and a multitude of IT management, big data analytics and security software products.
“Over the past three years, we have reignited our innovation engine with breakthrough offerings for the enterprise like Apollo, Gen 9 and Moonshot servers, our 3PAR storage platform, our HP OneView management platform, our HP Helion Cloud and a host of software and services offerings in security, analytics and application transformation,” Whitman said. “Hewlett-Packard Enterprise will accelerate innovation across key next-generation areas of the portfolio.”