HP To Split Into Two Companies On November 1

Annie Keller - Author

Oct. 1 2015, Updated 6:14 p.m. ET

The HP board has announced that on November 1, Hewlett-Packard Co will be two separate companies. One HP division will be responsible for computers and printers (HP Inc), and the other HP division will be responsible for corporate hardware and services (Hewlett Packard Enterprise). While the split was announced in October of 2014, the precise mechanisms were only confirmed recently. HP Inc will retain the Hewlett-Packard Co stock ticker log, while Hewlett Packard Enterprise will use the new ticker HPE on November 2. Stockholders in the original HP will be given one share each of HPE to begin.

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Even with the split on November 1, it’s still uncertain whether this will help save the company. The 75-year-old HP has struggled to keep its share of the market in the post-PC computer era. HP stock had fallen 27 percent since the last trading day before the split. Experts have questioned whether either company will be able to keep pace with its competitors.

The company started in 1939 and in 1986 shifted its focus to the computers and equipment that it would become known for today. HP is well known for its pioneering labs and the creation of the more flexible tech work schedule. By the end of the ’80s, the company got two-thirds percent of its revenue from its computer sector. By 1996, it made up 22 percent of all revenue from the Silicon Valley 150, a list created in April 1986 by the Mercury News to report on the large number of companies focusing on computer technology in the area. By 2006, HP made more computers than Dell and had more workers than IBM. Since the Silicon Valley 150 was first created, HP has always been either first or second on the list. It was only passed for the first time in 2012 by Apple, even though HP made more overall. Starting November 1, any number of companies — Google, Apple, Intel, Cisco — will be competing for the coveted top spot.

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HP has also planned to raise $14.8 billion in debt before the November 1 split. They will use the proceeds to redeem up to $8.85 billion in liability and refinance.

HP is also planning to lay off an estimated 33000 workers just before the split. 55000 workers have already been laid off from the company from 2012 to 2014. HP says that the layoffs will save the company an estimated 2.7 billion dollars a year. But the layoffs will also affect almost 10 percent of all company workers. The layoffs have been criticized by others who say that the split of the two companies will require more workers to make it work, not fewer. Some are even speculating that all the downsizing is in preparation to sell the company to other providers, like Oracle.

“This is a good day for Larry Ellison, not a good day for HP employees.”

An anonymous analyst’s words may be a foretelling of HP life after the November 1 split.

Other former HP employees are also trying to make their mark on the world. Former HP CEO Carly Fiorina is set to compete in the 2016 presidential race as a Republican. She was fired in 2005 after laying off 30000 workers, a number that seems too pale now in face of the many HP has laid off since before and after the planned split. Current CEO Meg Whitman once had political aspirations as well; she unsuccessfully ran for governor of Florida in 2010.

HP’s biggest problem that they hope to solve by the split is that the once giant PC and printer division is being rapidly supplemented by tablets and cloud drives. The HPE company formed by the split is aiming to work on private business clients, storage devices, and networking, just the thing the other company is trying to work against. Can an HP divided against itself stand? Only time will tell.

(Photo by Ethan Miller/Getty Images)


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