Seventy-five years after its birth as the original California garage startup, Hewlett-Packard Monday confirmed plans to split itself into two companies: Not Hewlett and Packard, but an “HP Enterprise” focused on cloud computing and tech services for businesses, and an HP Inc. that will make and sell printers and computers.
Both companies will start life in late 2015 with revenues of close to $60 billion a year, at current rates. Hewlett-Packard also said it envisions being able to eliminate 55,000 jobs in the spinoff, 5,000 more than previously announced.
Company CEO Meg Whitman, who will be chief executive of HP Enterprise and non-executive chairman of HP Inc., said in an interview with NECN sister network CNBC: “They go after quite different market segments, and we now have the opportunity to align rewards and results to respond to customer needs faster with these two big companies. So we're really excited about these better offerings for customers and partners, career opportunities for employees , and we believe it will create real shareholder value.’’
Whitman added: “Think about this for a second: The competition for our printing and personal systems businesses are almost entirely different than the competition that we face in our enterprise group, enterprise services business, and our software business. So having more focus, more agility, tying rewards to results, we think is going to make a big difference and propel us on this next level of the journey on our turnaround.’’
Investors seemed to love the deal, which began to dribble out Sunday before the market opened Monday: HP stock closed up $1.67 at $36.87, or 4.7 percent for the day. HP shareholders are to get one share of stock in each of the two new companies for each 1 HP share they have today, in a tax-free deal that HP hopes to close before the end of 2015.
HP has a big campus in Andover, Massachusetts, that has employed several hundred people in recent years, and several other locations around New England. To the extent HP is now looking at 10 percent more job reductions than it was earlier, that may be bad news for New England operations, but location-by-location impacts of the corporate breakup haven’t been disclosed yet.