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Hewlett-Packard Will Split Into Two Companies

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Hewlett-Packard Will Split Into Two Companies

The Industry

Hewlett-Packard Will Split Into Two Companies

Hewlett-Packard Will Split Into Two Companies

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Meg Whitman, the current president and CEO of Hewlett-Packard, will lead one of the two companies the tech giant is creating by dividing its corporate services and printing/PC units. Richard Drew/AP hide caption

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Richard Drew/AP

Meg Whitman, the current president and CEO of Hewlett-Packard, will lead one of the two companies the tech giant is creating by dividing its corporate services and printing/PC units.

Richard Drew/AP

Computer giant Hewlett-Packard, a stalwart through decades of shifts in America's technology landscape, is dividing itself into two companies in its most drastic attempt yet to adjust to new markets.

The ailing company that was founded 75 years ago in a Palo Alto garage was synonymous with Silicon Valley.

"HP was Silicon Valley. That's how Silicon Valley started," says Marco Iansiti, a professor at the Harvard Business School who heads the Technology and Operations Management Unit. "It's one of those beautiful, original Silicon Valley stalwarts that is in some ways winding down or breaking up into individual pieces."

HP has laid off more than 40,000 workers in recent years; mergers that were meant to help it compete have not panned out.

HP confirmed the plan this morning, saying it's separating "into two industry-leading public companies."

NPR's Jim Zarroli reports for our Newscast unit:

"One company will be called Hewlett-Packard Enterprise, and it will focus on technology infrastructure software and services. The other, HP Inc., will sell printers and what the company calls personal systems — or PCs.

"Hewlett Packard is a legendary Silicon Valley pioneer. It has 300,000 employees and $112 billion in revenue. But it has struggled to adapt to an era where mobile devices have replaced PCs. And the company has been under pressure from shareholders and analysts to split."

Current HP CEO Meg Whitman will become the president and CEO of Hewlett-Packard Enterprise, as well as chairing HP Inc.'s board. The CEO post at HP Inc. will be filled by Dion Weisler, an executive who now leads the printing and personal systems division.

Reuters reports that HP's printing and personal computing businesses account for about half the company's revenue and profit, according to its latest quarterly financial results. The agency adds that HP's market capitalization is currently around $66 billion.

"Nimbleness may be the defining characteristic of technology companies over the next couple of years," Whitman said on a morning investor call. "We aim to be two Fortune 50 companies but a lot more nimble, a lot more focused."

As Bloomberg News notes, the move is an about-face for Whitman, who cut off a plan to split HP when she was brought on to turn things around back in 2011. We'll note that Whitman's former company, eBay, announced its own split last week, saying it would break off its PayPal service.

As it attempted to adapt its business model in recent years, Hewlett-Packard made several dubious acquisitions, including the disastrous $10 billion purchase of search company Autonomy that "erased $8.8 billion from its books" in 2012. And just four years after it bought Electronic Data Systems for nearly $14 billion in 2008, HP took an accounting charge of $8 billion on the deal.

Since reaching a recent low of less than $12.50 in November of 2012, HP's stock has been on the rebound: It topped $38 in August of this year and rose above $37 in early trading as news of the split spread Monday.

NPR's Rob Szypko contributed to this report.