HP to split into two companies: report

PanARMENIAN.Net - Hewlett-Packard Co. plans to separate its personal-computer and printer businesses from its corporate hardware and services operations, the latest attempt by the technology company to improve its fortunes by breaking itself in two.

The company intends to announce the move on Monday, people familiar with the plan said, according to the Wall Street Journal.

It is expected to make the split through a tax-free distribution of shares to stockholders next year, said one of the people. If the division goes off as planned, it would give rise to two publicly traded companies, each with more than $50 billion in annual revenue.

A number of big companies, including eBay Inc. in tech, have chosen to break up lately, in part because of a belief that operations with different growth profiles are best managed as separate entities.

H-P, which has suffered sharp sales declines, sees better long-term potential for its corporate hardware and services business than for its printer and PC unit, said one person familiar with the plan, according to the Journal.

Ralph Whitworth, an H-P investor who until recently was its chairman, said about the news in a text message Sunday: “This would be a brilliant move at just the right moment in the turnaround. It would liberate significant trapped value.”

In 2012, under current H-P Chief Executive Meg Whitman, the company reorganized itself to combine the PC business with its more profitable printer operation, helping pave the way for the current plan.

The recent wave of breakups and spinoffs at technology companies and in the wider corporate world has been fueled by the idea that companies with a narrower focus perform better. The moves in many cases have been well-received by shareholders—and sometimes actively sought by them, the Journal notes.

Last week, online-auction pioneer eBay, where Whitman was once CEO, announced a plan to spin off its PayPal payments-processing unit.