The WSJ report cited unnamed sources who said the plan
could be announced as early as Monday. The split would be
tax-free distribution of stock to shareholders next year, one
of the Journal's sources said.
Reports of HP's plans come a few weeks after HP's talks
reportedly broke down about a possible merger with EMC,
whose CEO Joe Tucci is near retirement and whose
leadership in the data-storage industry is being challenged
by a group of upstarts.
The move by HP has long been speculated upon and follows
the 2011 exploration of a spinoff of the PC business during
Leo Apotheker's stormy and short tenure as CEO.
Current HP CEO Meg Whitman reorganized the company to
combine the PC and printer units, which are among the
leaders in shrinking businesses. HP was No. 1 in PCs until
last year when it slipped behind China's Lenovo Group Ltd.
HP brought in $55.9 billion in revenue from its printing and
personal systems group last year, about half of its total. But
sales dropped by about 7.1 percent in the unit, compared to a 6.7 percent drop for the company as a whole.
Last year, HP lost its place as the largest PC maker by
shipments, slipping to No. 2 behind China’s Lenovo Group
Ltd, according to industry research firm IDC.
The company is Silicon Valley’s 17th-biggest tech employer, with 2,600 full-time employees in the region as of May, according to Business Journal research. That’s almost a 50 percent drop from the prior year, when HP employed 5,000 in the region. The drop mirrors the company’s downsizing worldwide, with the company headcount at 317,500 in May, down 4 percent from 12 months before. (Well, what kind of reporting is this? A 50% local downsizing mirrors a 4% ww downsizing? Can the guy do any math at all?)
HP famously emerged from a Palo Alto garage 75 years ago, growing into a computing powerhouse whose stock peaked during the tech bubble of the 1990s. (not exactly. HP stock was uncommonly quiescent during the tech bubble of the 1990s since it missed the bubble. Cisco and Intel (and Sun Micro) caught the bubble; their stock today is still less than half their 2000 prices; not much different than HP). Its shares have tripled in value since November of 2012, when it hit an 18-year low. The stock is still only worth about half the all-time high it reached in 2000 (Cisco's is one-third, Intel's 45%, Sun non-existent). HP's market cap is about $66 billion, based on Friday's closing price of $35.20.
It has been at the center of several executive office storms
and strategic missteps over the past 10 years.
On the boardroom side are the notable firings of CEOs Carly Fiorina, Mark Hurd and Apotheker and a scandal involving spying on board members and reporters. Among its strategic mistakes, HP bought Palm after missing the shift to mobile computing. (Again, shoddy reporting. HP had not (yet) missed the mobile computing boom; they announced the TouchPad before Apple announced the iPad but couldn't deliver. They bought Palm before the iPhone (with the iPhone 3 was successful. Palm's Pre was a far better phone than anything on the market, but the iPhone 3 scooped the field with the App Store, which of course made it "not a Phone, but a platform). 't also overpaid wildly for British software company Autonomy, which led to an $8.8 billion writedown and resulting shareholder lawsuits (no argument here. Autonomy was a dumb Dumb DUMB move, indulged by Apotheker apparently who loved the Europeaness of the deal. Attensity, locally, especially after they bought Insight, was a far better technology, far smarter customers, and far cheaper. But no one asked me).
Whitman has tried to push HP into the areas where
technology is evolving, such as cloud computing,
without notable success yet. She has shored up its
stock through a series of job cuts and cost reductions.
After trying to revive HP and keep it whole through those moves, she and the board have apparently decided the time has come for a complete split between the sides of the business that are declining and the parts that have the best growth prospects going forward (this is nervy, to pronounce one side a loser right off the bat. Especially with HP taking back the PC dynamic in the last 135 days from Lenovo, and major printing announcements imminent. But it is the conventional wisdom of the pundits, so we're stuck with it for now).
Cromwell Schubarth is the Senior Technology Reporter
Chuck House, shown here with son Warren, is co-author with Raymond Price, of THE HP PHENOMENON: INNOVATION and BUSINESS TRANSFORMATION (2009, Stanford University Press). He is Exec Director of InnovaScapes Institute, which published his memoir of HP Colorado Springs, PERMISSION DENIED, in 2013. House, Chancellor Emeritus of Cogswell Polytechnical College, was also executive director of Media X, Stanford University's research program on innovation, media and technology. Previously director of Intel Corporation’s Virtual Collaboratory, EVP R/D at Dialogic, President of Spectron Microsystems, SVP at Veritas Software and Informix Software after 29 years at Hewlett-Packard in a wide variety of roles. An IEEE Fellow for Logic Analysis technology, he also was President of ACM, the world’s largest Computer Science society, and is an ACM Fellow. He holds HPs only Medal of Defiance, awarded by David Packard for "extraordinary contempt and defiance beyond the normal call of engineering duty". Other awards include Engineer of the Year, Smithsonian Wizard of Computing, Top 50 inventions of 20th century, CNN top 25 inventions of past 25 years, Intrapreneuring Honor Roll