Two companies with £35 billion plus turnover to be created from technology giant
HP is implementing the biggest change in its 75-year history as the company moves to split its cloud services business from its ailing printer and PC division.
From the end of next year the firm will be split into Hewlett-Packard Enterprise and HP Inc. The former will sell cloud technology, servers and software technology, while the latter will sell PCs, as well as both commercial and consumer printers.
Current group chief executive, Meg Whitman, will head up Hewlett-Packard Enterprise with current printing and personal systems vice president, Dion Weisler, taking the top spot at HP Inc.
HP is still a profitable company generating around £37.5 billion worth of revenues and £3.75 billion worth of profit at its enterprise services division. The PC and printing businesses posted combined profits of £3 billion on revenues of £34 billion last year.
However, the company and its investors have been worried about the long-term decline in both the PC and printing businesses. HP was replaced as the world’s largest PC manufacturer by Chinese firm Lenovo, while the printing industry, both consumer and commercial, has major structural issues.
The firm is currently in the middle of a five-year turnaround plan that has seen it implement plans that will see more than 50,000 jobs axed across the globe. At the end of last year the firm employed 317,000 people down from 350,000 in 2011.
HP had previously announced plans to split its PC business from the rest of the company but the plan failed following shareholder disapproval, eventually leading to the fall of chief executive Leo Apotheker in 2011.
“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,” Whitman said in a statement.
“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.”