Hewlett-Packard (HP) Co said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations.
HP said its shareholders would own a stake in both businesses through a tax-free transaction next year.
Each of the two businesses contribute about half of HP’s current revenue and profit.
The move will result in a monumental reshaping of one of technology’s most important pioneers, which still has more than 300,000 employees and is set to book US$112 billion in revenue this fiscal year.
The printing and personal computing business, to be known as HP Inc, will be led by Dion Weisler, currently an executive in that division.
HP’s current chief executive, Meg Whitman, is set to be chief executive officer of the new Hewlett-Packard Enterprise, which will house the corporate hardware and services operations, and chairman of HP Inc.
Current HP lead independent director Patricia Russo will be chairman of the enterprise company.
Under the plan, HP will separate its computer and printer businesses from its corporate hardware and services operations, and spin the unit off through a tax-free distribution of shares to stockholders next year.
HP’s printing and personal computing business accounts for about half its revenue and profit, according to last quarter’s financial results.
It is not clear how many of HP’s more than 300,000 staff work in each of the planned businesses.
Founded by Bill Hewlett and Dave Packard in a Palo Alto, California, garage in 1939, HP was one of the companies that shaped Silicon Valley and the PC revolution.
However, lately it has struggled to adapt to the shift toward mobile computing, and it has been overshadowed by younger rivals.
HP’s market value of US$66 billion is dwarfed by Apple Inc’s US$596 billion and Microsoft Corp’s US$380 billion.
It has also been overtaken by Chinese PC maker Lenovo Group (聯想), which is now the world’s No. 1 PC maker by shipments.
HP is the latest in a line of companies, often under shareholder pressure, to spin off operations in an attempt to become more agile and to capitalize on faster-growing businesses.
Last week online auction company eBay Inc said it would spin off electronic payment service PayPal.
HP and some of its investors have long considered such a move, a report noted.
As an older big computer company, for several years HP directors have discussed ways to restructure to keep up with technology upstarts.
A source familiar with the matter said HP had held merger talks with storage and cloud-computing firm EMC recently, as a way of moving more forcefully into online services.
Many investors and analysts have called for a breakup of the company, or a sale of the personal computer business, so that HP could focus on the more profitable operations of providing computer servers, networking and data storage to businesses.
Company executives have said in the past that personal computers underpin and support the company as a whole.
HP did consider spinning off its PC division in 2011 under then-chief executive officer Leo Apotheker, but ultimately decided against the idea.
The PC business has shown signs of life in recent quarters, growing broadly geographically as businesses replace aging machines.
Even so, the report of the plan to split off that business surprised some on Wall Street.
“I wonder what would have changed in the board’s thinking that previously they thought they needed computers together with services to properly serve large enterprises to now,” Hudson Square Research analyst Daniel Ernst said.
“PCs and printing remain in long-term secular decline, and ... the challenges for that portion of the split company will only grow as the demand continues to erode, and commoditization forces prices down further,” he said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to