Hewlett-Packard splitting into two companies, Whitman to lead enterprise unit

HP has decided to split into two separate publicly traded companies. One will comprise HP’s enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise, and one that will comprise HP’s personal systems and printing businesses, which will use the name HP Inc. and also retain the current logo.

“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. In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders,” said Meg Whitman, Chairman, President and Chief Executive Officer of HP.

Meg Whitman, president and CEO of HP, and Cathie Lesjak, chief financial officer of HP, will hold these positions with Hewlett-Packard Enterprise.

When the separation is complete, Whitman will also serve on the Board of Directors of Hewlett-Packard Enterprise, and Pat Russo will move from lead independent director of HP to chairman of Hewlett-Packard Enterprise.

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Dion Weisler, executive vice president of HP’s printing and personal systems business, will lead HP Inc. as president and chief executive officer.

Whitman will also serve as non-executive chairman of HP Inc.’s Board of Directors.

Hewlett-Packard Enterprise will have a portfolio and multi-year “innovation roadmap” across technology infrastructure, software and services to allow customers to take full advantage of the opportunities presented by cloud, big data, security and mobility in the New Style of IT.

“By leveraging its HP Financial Services capability, the company will be well positioned to create unique technology deployment models for customers and partners based on their specific business needs,” the company said. Additionally, the company intends for HP Financial Services to continue to provide financing and business model innovation for customers and partners of HP Inc.

On the other hand, HP Inc. will deal in the personal systems and printing markets. “As the market leader in printing and personal systems, an independent HP Inc. will be extremely well positioned to deliver that innovation across our traditional markets as well as extend our leadership into new markets like 3-D printing and new computing experiences - inventing technology that empowers people to create, interact and inspire like never before,” Dion Weisler, executive vice president of HP.

HP, which has about 300,000 employees, is the latest in a line of companies often to spin off operations in an attempt to become more agile. Last week, eBay Inc announced its plan to spin off electronic payment service PayPal.

According to Reuters, many investors and analysts have 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.

“The major benefit I see in the move is that the enterprise business will have a singular focus on the data center, and the PC and printer business can be a lot speedier and agile,” USA Today quoted Patrick Moorhead, president of Moor Insights & Strategy, a tech analyst firm, as saying. He said HP will need to ensure its PC and printer business has enough cash to compete in both the consumer PC and emerging smart home markets.

The transaction is currently targeted to be completed by the end of fiscal 2015.