Hewlett-Packard to Split in Two

Late yesterday we got remarkable news that Hewlett-Packard (HPQ) is splitting itself in two new companies.

Meg Whitman will lead one new company, which will be Hewlett-Packard Enterprise. They’ll focus on hardware and services. The other new company will focus on PCs and printers and they’ll be known as HP Inc. (I’m fairly confident that neither new company will have those names within five years.)

This is big news, especially for those of us who study business history. Hewlett-Packard was one of the great American business legends. It was famously started in a garage by Bill Hewlett and Dave Packard. They used a coin toss to decide if it would be Hewlett-Packard or Packard-Hewlett. The company was a spectacular success for several decades.

Frankly, Hewlett-Packard never fully recovered from the bursting of the tech bubble in 2000. They ran through a few mediocre CEOs (except for Mark Hurd), and they took on several poorly considered acquisitions. In 2001, they bought Compaq (which was fought by Walter Hewlett, Bill Hewlett’s son).

I don’t have an opinion of which of the new companies will be better, but I applaud this move. There should be more breakups in Corporate America. It’s better for shareholders and better for the companies. Also today, Hewlett-Packard said that earnings-per-share, for this fiscal year (ending October 2015) will range between $3.23 and $3.43.

Posted by on October 6th, 2014 at 10:36 am


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