Whitman: HP to 'reignite innovation' post-split
Happy times ahead, claims company chief, with both vendors set to lead the market
Chief executive Meg Whitman described HP's future in overwhelmingly optimistic, glowing terms as the break-up of the 75-year-old Silicon Valley giant was announced.
The split - into a PC and printer company that will retain the HP, Inc moniker, and an enterprise hardware and services firm to be known as Hewlett-Packard Enterprise - was confirmed this morning at 6:30am US time by the vendor - sending shares up six per cent 20 minutes later, before Wall Street opened.
Whitman, who will now be president and chief executive officer of HP Enterprise and non-executive chair of HP Inc, said both publicly listed companies will be "industry leading" across all its main segments.
"Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market," she claimed in HP's stock market announcement.
"Over the past three years, we have reignited our innovation engine with breakthrough offerings for the enterprise like Apollo, Gen 9 and Moonshot servers, our 3PAR storage platform, our HP OneView management platform, our HP Helion Cloud and a host of software and services offerings in security, analytics and application transformation. Hewlett-Packard Enterprise will accelerate innovation across key next-generation areas of the portfolio."
There was no admission of the struggles the Palo Alto, California-based vendor has been through in recent years, or of the varied attempts at a restructure so far. Instead, the split is but the latest "successful" step in the firm's five-year turnaround plan, according to the announcement.
"The decision to separate into two market-leading companies underscores our commitment to the turnaround plan. 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 (pictured, right) said.
"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."
No mention was made of plans for reorganisation and redistribution of the current global partner ecosystem between two new vendors.
As previously reported, Pat Russo will chair the HP Enterprise board after the split, which is expected to complete via a tax-free transaction by the end of HP's financial 2015 year with current HP shareholders owning stock in both HP Enterprise and HP, Inc.
Dion Weisler will be president and chief executive officer of HP, Inc.
"This is a defining moment in our industry as customers are looking for innovation to enable workforces that are more mobile, connected and productive while at the same time allowing a seamless experience across work and play," said Weisler.
"As the market leader in printing and personal systems, an independent HP, Inc will be extremely well positioned to deliver that innovation across our traditional markets as well as extend our leadership into new markets like 3D printing and new computing experiences -- inventing technology that empowers people to create, interact and inspire like never before."
HP, Inc will retain the current HP logo, the vendor stated.
Martin Hellawell, chairman of HP partner Softcat - which works with both sides of the business - welcomed the news.
"The dust is still settling on my thoughts but overall I'm very positive about it," he said.
"I'm glad [the PC and printer arm] is staying in the HP family, rather than being sold off. I believe it will be a very easy business to deal with as there weren't a lot of synergies between PPS and the rest of the business since they split it off all those years back anyway.
"I can see more up-side than down-side. Dion is a great guy and very lively and he will enjoy being given a freer rein in that organisation."
Acquisition ahead for HP, Inc?
Kate Hanaghan, research director for infrastructure services at analyst firm TechMarketView, said this is a good move for HP.
"I suspect Meg Whitman has been biding her time during the turnaround programme and now feels the timing is right," she said.
Hanaghan said, though, that the really interesting questions are around what happens next.
"Does the ‘new' HP, Inc PC and printer business become a credible target for acquisition? We think so," she said.
"And don't be surprised if a relatively unknown Asian firm opts to pounce."
She wondered also whether all the previously reported rumours around a possible merger between HP and EMC might actually now bear fruit.
"Joining forces with Hewlett-Packard Enterprise is likely to seem a lot more palatable to EMC shareholders now the PC/printer business is off the scene," she suggested.
HP has refused to comment further or answer specific questions on the announcement.