HP Separation Plan Confirmed

Today, HP has announced its plan to separate into two new publicly traded companies: HP Enterprise and HP Inc., and will shed another 5,000 jobs to better support its five-year turnaround plan.

HP Enterprise is building upon servers, storage, networking, converged systems, services and software as well as the company’s OpenStack Helion cloud platform; whereas HP Inc. will be a personal systems and printing company with strong roadmap into new technologies like 3D printing and new computing experiences. Meg Whitman will be the President and Chief Executive Officer of HP Enterprise and Pat Russo the Chairman of its board. Dion Weislerto will serve as the President and Chief Executive Officer of HP Inc. and Meg Whitman the Chairman of its board.

According to HP, the separation:

• Creates two powerful industry-leading, Fortune 50 companies with strong financials and technology roadmaps
• Enables enhanced focus on distinct opportunities for long-term growth and profitability
• Provides two distinct investment opportunities with clarity on capital allocation priorities
• Better positions the two new companies to generate long-term shareholder value and accelerate performance
• Partners and customers will have simpler and more nimble organizations with which to conduct business

2014 marks the 3rd year of HP’s five-year turnaround plan. As of the 3rd quarter of 2014, approximately 36,000 employees had left HP as part of the program. In today’s announcement, HP anticipates a total of 55,000 reductions will be made, with another 5,000 added compared to what it has announced during the Q2’14 earnings call. Net incremental savings from increasing the headcount reductions are planned to be used in FY15 to fund investment opportunities in R&D and sales

Meg Whitman, Chairman, President and Chief Executive Officer of HP, “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. 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. 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.”

HP said the separation transaction is expected to close by the end of fiscal year 2015 subject to certain conditions