Restructure prepares HP for two-way split

Hardware Chief executive Lew Platt is due to leave when reorganisation is complete.

Hewlett Packard will split itself in two as part of a reorganisation that will separate the testing, medical and chemical products businesses from the computing and imaging operations.

The remaining computer and imaging division will operate under the HP name and will include all of its enterprise computer, software and services, PC and printing and imaging businesses. The testing, medical and chemical products units will become part of a measurement company, which will represent $7.6 billion of HP's total revenue of $47.1 billion in 1998.

Commenting on the restructure, Lew Platt, chief executive of HP, said: 'We are taking this action to sharpen the strategic focus of our businesses and improve their agility and responsiveness to customers and partners.

This will offer exciting opportunities to staff and will enhance the two companies' growth and earnings potential.'

But Platt will leave HP when the restructure is completed. He will head a committee of senior HP executives to search for a chief executive for the computer and imaging business, sometime after 2000. Edward Barnholt, general manager of the measurement division at HP, will become chief executive of the measurement side of the business.

'The two companies we're creating compete in fast-moving, highly competitive markets,' Platt added in a statement. 'This realignment positions each business to deliver enhanced growth in revenue and earnings.'

HP stockholders will receive shares in each company. HP revealed it was considering a public share offer for approximately 15 per cent of the measurement unit's outstanding shares by the end of the year. It claimed the offering would be the largest technology share offer in Silicon Valley history.

Subsequent to the IPO, HP said it would distribute the remaining shares to its stockholders in a tax-free transaction.

Robert Wayman, chief financial officer at HP, added: 'This announcement is not about significant short-term cost reductions.

'Where we need to realign our workforce to support the new companies, we will manage this, as we have in the past, through our traditional approaches, such as redeployment, flex-force adjustments and attrition.'