HP to spin off PC and printer divisions after all

BACKTRACKING: The decision comes after CEO Whitman had repeatedly rejected such a move.


    Oct 07, 2014

    HP to spin off PC and printer divisions after all


    MEG Whitman shelved plans to spin off Hewlett-Packard's (HP's) personal-computer business when she became chief executive three years ago. Now, she is reversing her position.

    After struggling to turn around the company on becoming CEO in 2011, Ms Whitman is adopting a plan announced yesterday to split HP's PC and printer divisions off from its enterprise hardware and service groups to remain competitive.

    It is a scenario she rejected as recently as last year, saying more time was needed to restore the company's stature as the innovator that put Silicon Valley on the map.

    "If you try to hive a division off, it's really hard because you almost have to recreate the whole thing," Ms Whitman told Bloomberg News in 2011. Last year, she defended her strategy for the company, saying it "will be one of the great comeback stories in American business".

    Even though she has rejected a split-up of HP before, Ms Whitman, 58, is no stranger to reinvention. Before running HP, she pursued a career in politics and made an unsuccessful run at becoming California's governor. Before that, she ran online marketplace eBay for a decade, following stints at Hasbro, floral service FTD, Stride Rite and Walt Disney.

    "She may have to shift gears now, from having been a very prudent, careful CEO to being a CEO who's getting the ball moving," said Erik Gordon, a University of Michigan business professor.

    With HP's split into a personal-computer and printer business, and corporate hardware and services operations, Ms Whitman will lead HP Enterprise, a business focused on corporate hardware and services.

    Dion Weisler, the vice president in charge of HP's personal-computer and printer operations, will become CEO of that business.

    The breakup will be a tax-free distribution of shares to shareholders. Ms Whitman will also become chairman of the PC and printer company, while current lead independent director Patricia Russo will be chairman of the enterprise unit.

    The idea of HP spinning off or separating the printers and PCs businesses has come up in discussions between EMC, a maker of storage computers, and HP, a person familiar with the matter said. The plan would have been to have a combined company focusing on areas such as storage, servers, software and security, the person said.

    Ms Whitman has been introducing new products and yesteray she expanded a job-cut programme to more than 55,000 jobs to trim costs.

    HP has fallen behind in mobile computing at a time when consumers have migrated to smartphones and tablets, and lost its place as the largest maker of PCs to Lenovo Group last year.

    Other technology companies have already embarked on massive restructuring. IBM sold its PC unit to Lenovo in 2005, and last week closed the sale of its low-end server unit to the Chinese company. Last month, eBay announced that it would spin off its PayPal unit.

    Ms Whitman has been putting out fires since she took over the helm at HP. The 2011 acquisition of British software company Autonomy forced HP to take an US$8.8 billion (S$11.2 billion) writedown and mired the company in lawsuits that continue to this day.