Hewlett-Packard to Split Into Two Companies
October 8, 2014 Leave a comment
American technology company Hewlett-Packard will split into two separate companies, it was announced Monday October 6th. Hewlett-Packard will be divorcing its computer and printer business, from its corporate hardware and cloud services operations in hopes of improving the long-term business practices of each new company. At present, Hewlett-Packard has targeted the end of the fiscal year 2015 as a deadline for complete separation of the two companies.
The computer company will be called HP Inc. and the business-focused company will be called Hewlett-Packard Enterprise. HP Inc. will be retaining the current Hewlett-Packard logo. The computer and printer business has been the more successful of the two divisions in recent years. The split gives both companies the opportunity to specialize in what they do best and hopefully increase their success through innovation and investment in research and development.
Meg Whitman, current CEO of Hewlett-Packard who will be taking over Hewlett-Packard Enterprise, praised the gutsy decision. In a statement following the announcement on Monday morning, she said “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.”
Investors are excited about the news, resulting in a 5% gain in stock prices in the early hours of trading on Monday. Shareholders have been informed that they will be given a stake in both businesses.
The company, founded in 1939 by Bill Hewlett and Dave Packard, brought personal computers to the everyday consumer and currently employ more than 300,000 employees worldwide. However, there will be growing pains in the form of layoffs. Hewlett-Packard will be cutting roughly 5,000 jobs and instead investing in research and development; this is in addition to the nearly 50,000 they are already planning to trim.