Hewlett-Packard, the $66bn (£41.33bn) technology giant whose disastrous takeover of UK software group Autonomy tipped it into crisis mode, has opted to break up its unwieldy empire.
The move comes as the tech world has been gripped by allegation and counter allegation of fraud and misrepresentation over HP’s takeover of Autonomy, which the US group claims overstated the number of contracts it had during the pair’s takeover discussions.
Now, HP’s under-pressure chief executive Meg Whitman has decided to split the company’s personal computers and printers arm from its huge business making hardware for big corporate customers. Each side of the company will be worth tens of billions of dollars but the deal is aimed at making the sprawling PC division easier to manage and focus on.
The decision, first reported last night by the Wall Street Journal, could be formalised later today.
Ms Whitman would take the role as chief executive of the enterprise division and senior PC division executive Dion Weiser will head up that arm. Ms Whitman will also be chairman of PC division, while the current senior independent director Patricia Russo will be chairman of enterprise division.
Observers pointed out wryly that this was the plan of Ms Whitman’s predecessor Leo Apotheker, whose idea of breaking the business up was quickly dropped when she took his job.
The two sides of the vast global business are fairly equal in size, with the PC and printers arm chalking up revenues of $55.9bn last year.
HP was the world’s biggest maker of PCs until it lost its prime place last year to China’s Lenovo, which has been lashing into the American giant’s market share with its lower cost of production and increasingly sophisticated equipment.
Ms Whitman has been struggling to find HP’s next area of growth in a computing world that has been radically changed by the rising popularity of tablets and technology enabled by cloud computing. She has tried to get the company to grow in the cloud software area but has made little headway, analysts said.
Video: Alex Lawson takes us through today's biggest business stories
Meanwhile, her efforts to pull off a mega-merger with the data storage giant EMC Corp recently came to nothing.
Faced with the need to cut costs and deal with falling sales of traditional PCs, she has been shedding tens of thousands of staff around the world.
HP’s decision is likely to be popular on Wall Street, where investors have been demanding sprawling companies with diverse interests break themselves up into divisions that are easier to value and simpler for management teams to control. Only last week, eBay said it would hive off its PayPal division.Reuse content