Hewlett-Packard Splitting Its Business in Two

Justin Sullivan/Getty Images(PALO ALTO, Calif.) — Hewlett-Packard announced on Monday it is splitting into two separate companies in an effort to boost productivity.

Its personal computer and printing business will break off into one company, which will be called HP Inc. and maintain the current logo. The remaining business will be called Hewlett-Packard Enterprise and will include the company’s technology products, including data storage, servers and software.

Weak sales, a 2012 reorganization and tens of thousands of layoffs later, Hewlett-Packard CEO Meg Whitman said the split was necessary to strengthen the business.

“It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders,” Whitman said in a statement. “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.”

The split will have to be approved by Hewlett-Packard’s board and won’t likely happen until the end of next year. Shareholders will own a stake in both companies.

Once complete, both companies will be able to enjoy a competitive advantage in their respective areas and pursue interests they never had the freedom to while together, according to the company.

Boosted by the profitability of its computing and printing business, company officials said the leaner Hewlett-Packard be able to focus even more so on innovation. The company will have the cash flow to explore emerging technologies and make strategic investments in areas such as 3-D printing, according to HP’s statement.

The split will allow the newly named Hewlett-Packard Enterprise to become a “simpler, more nimble partner” to its corporate customers, the company said. It is also expected the separation will reduce debt at the operating company level, allowing HP Enterprise the freedom to make investments in next-generation areas that could help drive future business.

Whitman will become president and CEO of Hewlett-Packard Enterprise and will remain chairman of the board of HP Inc. Dion Weisler will assume the duties of president and CEO of HP Inc. once the split is official.

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