Hewlett-Packard has confirmed speculation it will split its operations into two separate companies, with one focusing on enterprise IT and the other on personal systems and printing.
A new business called Hewlett-Packard Enterprise will combine the company’s servers, storage, networking, and cloud services businesses, while HP’s Printing and Personal Systems Group will be combined with HP Financial Services to form HP Inc.
The split will see current chief executive and former candidate for California governor, Meg Whitman, become chief executive of Hewlett-Packard Enterprise, with Pat Russo serving as chairman. Dion Weisler will be chief executive of HP Inc, with Whitman as chairman.
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The split is expected to be completed by the end of fiscal year 2015, with current shareholders set to receive shares in both Hewlett-Packard Enterprise and HP. It will also be structured in such a way as to ensure it will be tax-free to shareholders for US income tax purposes.
In May 2102, HP announced it was slashing 27,000 jobs worldwide. Despite the jobs cuts, in its second quarter results for fiscal year 2014, HP reported year-on-year revenue falls across its printing (down 4%), enterprise (2%) and enterprise services (7%) and financial services (2%) divisions.
“The decision to separate into two market-leading companies underscores our commitment to the turnaround plan,” Whitman said.