Susan Smith has worked as an editor and writer in the technology industry for over 16 years. As an editor she has been responsible for the launch of a number of technology trade publications, both in print and online. Currently, Susan is the Editor of GISCafe and AECCafe, as well as those sites’ … More »
HP plans to split into two different companies
October 14th, 2014 by Susan Smith
Hewlett-Packard Co said it would split into two listed companies, separating its computer and printer businesses from its corporate hardware and services operations, thereby eliminating another 5,000 jobs that would be part of its “turnaround plan.” The company currently has over 300,000 employees.
The 75-year-old company has been trying to keep pace with the new era of mobile and online computing. HP has no plans to try to go into the consumer mobile devices market. Shares were up 4.4 percent at $36.78 in Monday’s late morning trading.
Chief Executive Meg Whitman told Reuters the newly created HP Inc would mostly stick to its mainstay products– PCs and printers, while exploring related markets such as 3D printing.
Shareholders will own a stake in both businesses through a tax-free transaction next year, said HP. The two businesses each contributes about half of HP’s revenue and profit.
HP’s revenues have increased over the past few years so that they are splitting the company at a time when they have a position of strength. The idea behind the sale is that HP will be able to focus on the more profitable side of its business.
“Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates,” Ralph Whitworth, former HP chairman and founder of Relational Investors LLC, said in a statement.
It’s common these days for companies to spin off operations in order to become more flexible and capitalize on a faster-growing business. Even eBay said that it would spin off its electronic service for payments, PayPal.