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It's Official: Hewlett-Packard To Split In Two, Fire Another 5,000; Goldman Notches Second Spin-Off Success After PayPal
While the WSJ already broke the news yesterday that Hewlett Packard would split in two companies, and as such today's "shocking" announcement will hardly have the impact of the just as "surprising" split of PayPal which came on the last day of September, what is probably most notable - in addition to the news that HPQ will fire another 5,000 workers, bringing the total to 55,000 - is that just as in the case of PayPal, so for Hewlett-Packard, the financial advisor, i.e., the company which pitched the spin off to executives, was none other than Goldman. One wonders where else Goldman is advising on "spin offs" to take advantage of the bubbly stock market valuations. As a reminder, HPQ is only doing this deal and accessing the public markets now because several years ago it tried to do exactly the same thing in a private transaction with a strategic or financial buyer, and found no bids. Luckily, now we have central bank froth and pervasive risk euphoria to help management bail out at the highest possible stock price.
From the Press Release:
HP to Separate Into Two New Industry-Leading Public Companies
- Hewlett-Packard Enterprise Will Define the Next Generation of Technology Infrastructure, Software and Services for the New Style of IT HP Inc.
- Will Be the Leading Personal Systems and Printing Company Delivering Innovations That Will Empower People to Create, Interact and Inspire Like Never Before
- Strategic Step Provides Each New Company With the Focus, Financial Resources and Flexibility to Adapt Quickly to Market and Customer Dynamics While Generating Long-Term Value for Shareholders
Highlights:
- Hewlett-Packard Enterprise will build upon HP's leading position in servers, storage, networking, converged systems, services and software as well as its OpenStack Helion cloud platform
- Meg Whitman to be President and Chief Executive Officer of Hewlett-Packard Enterprise; Pat Russo to be Chairman of Hewlett-Packard Enterprise Board
- HP Inc. will be the leading personal systems and printing company with a strong roadmap into the most exciting new technologies like 3D printing and new computing experiences
- Dion Weisler to be President and Chief Executive Officer of HP Inc.; Meg Whitman to be Chairman of the HP Inc. Board
- Company reiterates fiscal 2014 non-GAAP diluted net earnings per share (EPS) outlook of $3.70 to $3.74 and updates GAAP diluted net EPS outlook to $2.60 to $2.64
- Company issues fiscal 2015 non-GAAP diluted net EPS outlook of $3.83 to $4.03 and GAAP diluted net EPS outlook of $3.23 to $3.43
- HP (NYSE: HPQ) today announced plans to separate into two new publicly traded Fortune 50 companies: one comprising HP's market-leading enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise, and one that will comprise HP's market-leading personal systems and printing businesses, which will do business as HP Inc. and retain the current logo. Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc. The transaction is intended to be tax-free to HP's shareholders for federal income tax purposes.
Today's announcement comes as HP approaches the fourth year of its five-year turnaround plan. Over this time, the company has executed successfully against its turnaround objectives, keeping customers and partners at the forefront. HP has reignited its innovation pipeline, strengthened its go-to-market capabilities, rebuilt its balance sheet, and inspired its workforce and management teams. The company is now positioned to accelerate performance, drive sustained growth and demonstrate clear industry leadership in key areas.
"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," said Meg Whitman, Chairman, President and Chief Executive Officer of HP. "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."
Both companies will be well capitalized and expect to have investment grade credit ratings and capital structures optimized to reflect their distinct growth opportunities and cash flow profiles. The separation into independent publicly traded companies will provide each company with its own, more focused equity currency, and investors with the opportunity to invest in two companies with compelling and unique financial profiles well suited to their respective businesses.
Management Structure
Meg Whitman, President and Chief Executive Officer of HP, and Cathie Lesjak, Chief Financial Officer of HP, will hold these positions with Hewlett-Packard Enterprise. When the separation is complete, Whitman will also serve on the Board of Directors of Hewlett-Packard Enterprise, and Pat Russo will move from Lead Independent Director of HP to Chairman of Hewlett-Packard Enterprise.
Dion Weisler, Executive Vice President of HP's Printing and Personal Systems business, will lead HP Inc. as President and Chief Executive Officer. Whitman will serve as non-executive Chairman of HP Inc.'s Board of Directors.
Hewlett-Packard Enterprise
Hewlett-Packard Enterprise will have a unique portfolio and strong multi-year innovation roadmap across technology infrastructure, software and services to allow customers to take full advantage of the opportunities presented by cloud, big data, security and mobility in the New Style of IT. By leveraging its HP Financial Services capability, the company will be well positioned to create unique technology deployment models for customers and partners based on their specific business needs. Additionally, the company intends for HP Financial Services to continue to provide financing and business model innovation for customers and partners of HP Inc.
Customers will have the same unmatched choice of how to deploy and consume technology, and with a simpler, more nimble partner. The separation will provide additional resources, and a reduction of debt at the operating company level, to support investments across key areas of the portfolio. The separation will also allow for greater flexibility in completing the turnaround of Enterprise Services and strengthening the company's go-to-market capabilities.
"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," continued Whitman. "Hewlett-Packard Enterprise will accelerate innovation across key next-generation areas of the portfolio."
HP Inc.
HP Inc. will be a proven leader in the personal systems and printing markets with exciting new technologies on the horizon. The new company's strong profitability and free cash flow will enable investments in growth markets such as 3-D printing and new computing experiences. At the same time, HP Inc. will continue to execute against a well-defined and established strategic plan, ensuring continuity for customers and consistent value to shareholders.
"Since assuming responsibility for the Printing and Personal Systems Group, Dion and his leadership team have done an excellent job of building our relationships with customers and channel partners, segmenting the market and driving product innovation," added Whitman. "The creation of HP Inc. will only accelerate the progress the team has made."
"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 3-D printing and new computing experiences -- inventing technology that empowers people to create, interact and inspire like never before."
Transaction Details
The separation transaction is intended to be tax-free to HP shareholders for federal income tax purposes. The transaction is currently targeted to be completed by the end of fiscal 2015, subject to certain conditions, including, among others, obtaining final approval from the HP Board of Directors, receipt of a favorable opinion and/or rulings with respect to the tax-free nature of the transaction for federal income tax purposes and the effectiveness of a Form 10 filing with the Securities and Exchange Commission.
Goldman Sachs & Co. is serving as financial advisor and Wachtell, Lipton, Rosen and Katz is serving as legal advisor to HP.
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awful laptop division and shitty printer division?
Time to move to Canada.
Go north....to freedom.
And cold!
and water
Water is over rated.
Don't get to comfortable, looks like you got JUstin Trudeau warming up on deck. If he's anything like his father, you're screwed.
worse
How to describe this split? The sound of two garbage trucks uncolliding? HP never recovered from CEO Carly Fiorina, an incompetent good only at laying workers off and slashing R&D spending. Whitman's role model. Down the line, when the Fed runs out of credit to buoy up the stock of garbage companies, expect the stock prices of the combined new companies to be less than the standalone HP now. By then, Whitman will be out at HP and running for a Califirnia U.S. Senate seat, funding the campaign with her newfound HP riches.
Fiorina should be pelted with rocks and garbage for what she and her crooks did to that great company.
You're being too kind. .
She got mad at the legacy HP side and got in bed with Compaq... In essence buying HP with our own money, then puting Compaq in charge, because everyone that came out of the "clean room" was Compaq, with very few exceptions... Even published a culture roadmap spreadsheet depicting Blue as laid back and easy to overthrow, and Red (And Digital) as battle tough, hungry and a sure bet to win...
All because no one would stand up and cheer her at her town hall meetings... No one cheered because she took away free soda pop and beer on fridays in the office... What did she expect?
Plus 100+ on fiorina. I had to listen to her internal "exhort the troops" speeches when she clearly had little understanding of the product or the company.
Her sole accomplishment (?) was in the purchase of COMPAQ as HP's home grown server line were expensive miserable market failures.
After the split you end up with not a good bank and a bad bank but a bad HP and a worse HP. The worse HP will hold the printer division. Printer ink, on a per oz basis, is higher priced than perfume but no body bothers to print anymore when you can Snapchat to the web or FB your selfies. The desktop mkt is also in decline as the sweet spot is in mobile.
Didn't use to be that way, before they hired an affirmative action CEO.
now... so many are coasting and what remains are "stock watcher" managers and teams of really bad engineers, because MOST of the good ones left or were WFR'd because they were promoted, only to then be the low man on the totem pole on their new team... Which made you WFR bait (Work Force Reduction)... Which leads to teams of clicque's ... Ack!! (but no Ack back - Think UDP)
So one shitty company equals two great companies? Above my Goldman financial sorcery pay grade.
Yeah, see, you're overlooking the part where they fire another 5000 people. That's what will make it two great companies.
idea - Lets merge HP and Compaq, and reduce headcount at duplicate positions... Then we can buy a bunch of smaller companies, and again reduce headcount from duplicate positions... Then someday split businesses apart, again reducing headcount... Then...
Tie two stones together expecting them to float
DEMISE OF THE ICONS
chapter 3 in the fall of a empire
Sudden Debt,
Which reference 'book' are you using, by your statement, for the fall of the US Empire?
The Weather Underground Communist Manifesto?
We blame it on the climate change that's not happening.
Those assholes.....they promised us!
I want my money back.
OT, hey Tyler's, fuck the huge Prudential ads. Using a tablet means your articles already only occupy a thin column of print flanked by ad nonsense. Now fucking Prudential covers the whole page with the x button off screen. Are your words that meaningless? Time to think again or just another schill.
Same here I have a kindle fire and the pop up ads are taking the whole screen
Perhaps you should ask for a refund.
May I recommend you try https://adblockplus.org/
I don't think ZH decides about the ads' details. Usually there is a campaign running over the whole web for big advertisers.
Get you an adblock plugin for your browser and adapt the filters accordingly. I recommend AdBlock Edge (using firefox).
You gotta be one step ahead of the advertisers. Don't blame the Tylers, blame yourself for being technologically ignorant.
So will the employees that are to be sacked be walking around holding Hewlett Plackards and demonstrating?
I hope they have their shovels ready. More devastation to the Middle Class.
Hold on. You can't have it both ways, unless you're bi-sexual.
ANY corporation that DIS-assembles, any country that has seceding states, ANY union that has been part of a consolidation during the last 50 years that chooses or is forced to disassociate is another step in the right direction, headed for either extinction, survival or success.
ANY of those outcomes is to be devoutly prayed for, wished for.
As should be clear by now, tens of millions of jobs have been eliminated because of consolidation. The only entity that shows growth, that is centralized is Federal Government. And by the looks of the Secret Service debacles, it must be brightly clear that Bureaucracies are the only beneficiary of centralization. That or despotism.
WE should all ------as we did last week when Scotland decided to take the cowardly way out, proclaiming it could not even succeed with a near monpoly of North Sea grease---take note that DEPENDENCY is ultimately a killer of spirit, adventure and discovery, invention and the creative spark so badly missing from first world countries.
I celebrate the dissolution of EVERY juggernaut into smaller pieces. The United States today would have been a much more beningn country with far more effective leadership today if a dozen states had successfully seceded in 1861, and Lincoln had been assasinated then instead of after he killed, maimed and ruined millions of people to force an unwanted marriage down our collective throats.
Divorce is not a problem it's a solution.
I don't know if you are right, but well argued plus my up vote.
The problem with government though is that it does spin offs which become damaging. For example how many more contractors were in Iraq as opposed to government peronnel? Also the FED is a spin off.
- Problem is the Marriage between government & Corporations with no seat at the table for Labor (we need 24 Million good paying Jobs)
- FED is a spinoff? Seems like a private corporation with stockholders formed by European bankers in order to promulgate a Cartel
No divorce, yet!
My take on it? US will behavior a lot like Germany in the 1930's.
Government will become the main employer (supplier) because the private sector can’t.
Just not sure who will be the Jews (cut out of) the equation. Small business and towns that are heavily in minorities, maybe?
My take on it? US will behavior a lot like Germany in the 1930's.
We're taking volunteers for the death camps....you in?
Death panels......death camps......same damn thing.
US will behave a lot like Germany in the 1930's.
Yes, things are already too big, too many financial links, too much wealth created out of thin air, too much of the US Economy (& World Economy) depends on US Federal Spending and US Banker Money Creation.
Wall Street Money Printing, Looting Household & Looting Government & Looting US Corporation (US Corporate Assets).
Don't forget wars, got to have plenty of wars.
I love me some banker's wars......umm good!
http://www.youtube.com/watch?v=5hfEBupAeo4
Not gonna happen. We are flat broke and the day of reckoning is almost here.
Flat broke! Maybe in reality, but that isn't the world we live in. Peace Prize just dropped $100 million in bombs on the people that we gave $100 million in weapons last year.
I gave a greenie for the "peace prize" moniker. Gave me a chuckle
Just so you know, you are the minority to a Jew.
Comte d'herblay
I agree we have to break entities into smaller parts to make corruption much smaller when it happens.
We have to ignore the fearful calls that everything in the USA must be the "Biggest" in the world to keep our place as a supper power.
Anti-Trust was all about this.
Robber-barons are alive & Thrive in the USA... most obvious is any salary in excess of $2 Million Dollars. USA the home of "Classism".
Take money out of politics as a first step in breaking down corruption, nepotism (H.W. Bush, George W. Bush), Regulation Capture, Conflict of Interest, Wealth's Power over the Court System, Corporate Welfare, Financial Schemes, Tax Evasion Schemes, Shell Companies, Shadow Banking, Non-Standard Financial Instruments, Non-GAAP Accounting Rules, and Crony Financial Ratings.
Why should MIC Choose our wars and determine how much Federal Funding goes to MIC?
Decentralization is the only way out of this mess. These giant corporations are a joke, incapable of innovation and just used as slush funds for the execs to pilfer as they outsource all production and IP to China, who then just steals it all and creates the alternative.
The first state to make a successful break from the plans for Global Gaza will see an influx of citizenry the world cannot imagine. I've even thought that one of the failed Euroland states such as Greece or Italy, or even Ireland could become a mega for freedom and innovation IF, and it's a big IF, they can throw off the yoke of the globalists.
I read a little in a book Called "Failed States" the reasons why states fail.
- Wealth Extraction figures greatly in the Americas and Africa
- If household wealth is completely extracted majority will not be able to move unless they walk
- Mostly this shows that Banks & the banking System "pick the Winners (their employees & executives) and pick the Losers (Greece, Cyprus, Ireland)"
By corporate freedom you mean 0 taxes right?
Not zero, just one big fat one at the register.
You ignorant troll. Corporations pay NO TAXES!! They pass on all their costs to the buyer of their products. And Taxes are a COST!
You are an example of the economic, numeric and accounting illiteracy that is a pandemic albatross around this country's neck.
In HP's case there is a dependant wife who isn't working, she will soon be on the welfare roles.
companies that are specialized are weaker in crisis time than those whom have the ability to have multiple activities at the same time.
well known fact.
splitting just lead to fail.
old fashion companies are way more stronger facing crisis.
There was nothing "Specialized" about Gulf Oil. NOTHING.
Same for so many more in LBOS that only enriched the current executives while it fired millions of employees. Look at AOL For jesus fucking Christ's sake!!
And what Kozlowski did LBOing dozens of companies doing just fine on their own.
You have no idea what you are talking about, in citing only weak sisters to make your argument.
You must work in the Consolidation industry.
HP is so far behind on 3D printing it would cost them a fortune to catch up. They would LOSE money.
Well, if they follow their usual course of action, they will buy some 3D company (or multiple ones) to put themeseves in a "leadership" postition, then decide to write the whole exercise off 18 months later.
Delivering Innovations That Will Empower People to Create, Interact and Inspire Like Never Before
HAHAHAHAHAHAHA OMG
Let's try that old Google search again:
"at * we are passionate about innovation"
18,300,000 results.
Please, God, if you are out there, hear my cry. Bring on the great reset already, I beg of you.
Looks like a legacy of the CEO bitch Fiorina when HP got the INVENT keyword below its logo many years ago.
I found her speech from june 2001, a BIG load of bullshit.
http://www.hpinvent.com/hpinfo/execteam/speeches/fiorina/tiecon_01.html
She needs a bit more time to mature, you know how fickle those teenage girls can be these days.
The only thing lamer than,
" at * we are passionate about innovation" is,
" it's our people that make * better".
Now we are going to fire 5,000 of them on recommendations of the squid.
For these corps, innovation is just a code word for outsourcing, grabbing temporary profit increases and passing it out to the managers, fleecing the shareholders yet again.
Isnt it 55,000 workers getting the axe?
Edit- my bad its 55,000 total since may of this year
passionate about innovation or if you hear Operational Excellence...
Both mean the same... "We don't have a plan"...
The real money is in the ink. And the next gen printing will be in auto parts, gun parts and prosthetics. This is a celebration of limited duration.
Hahahahahahahahahahahahahahahahahahahaha!
http://finviz.com/futures_charts.ashx?t=PL&p=d1
http://finviz.com/futures_charts.ashx?t=SI&p=d1
Your grandkids are paying for it.....yuck it up bitch.
Better get some......soon!
Except for platinum.....I can't advise buying that.....it's really hard to sell.
Glad I could upset your day. I've never seen anyone get so upset on a fire sale.
The last time I bought in mass was silver at $5.00 an ounce over 10 years ago.....I don't remember seeing you there.
Have a nice day Amigo.....and good luck.
They are going to shrink, not only split.
Maybe they hope to sve al least one of them.
And innovation: mayle 15 years backwards, yes, but the last 15 years they switched the innovation off. A dinosaur, going on a path of long shrinking and agony.
They are well on their way to being liquidated.
"Welcome to the 90's, Mr. Banks"
They claim they were innovating, but nobody noticed. The PC and printers are now a commodity, very tight margins. People don't want to pay a premium. Progress in both has been minimal the last ten years. Enterprise hardware? Prices have been plunging the last 5 years, and firms are making do rather than buying new. Storage costs have fallen off a cliff, and HP can't sell much anyway. HP is a company that once was, not a company that will be.
Same with Dell.
At least with Dell they are not trying to get you to pay a premium for the 'name'.
" People don't want to pay a premium". As the politicians and corporate 'heads' drive the US more and more into 3rd world status as far as jobs.... who the fuck needs printers or high end computers? Where is the discretionary income to make such purchases supposed to come from?
Sounds boring as hell.
I've been here for 15 minutes.....and I haven't heard a damn thing about Kim Kardashian or Dancing with the Stars.
Can I get a refund?
Come on, enough of you must have been around long enough to have seen this cycle go through the mill a few times before, surely?
First, the bankers spin that only by acquisitions can companies achieve the leading positions and economies of sclae necessary to succeed and to deliver sufficient return to investors. they dream up a few choice new buzzwords and jargon so idiot execs can feel clever trying to use them before the other idiot execs they know, and soon it catches on. Then the bankers, assisted by the lawyers, make obscene amounts on facilitating a swathe of takeovers.
Eventually, they've drunk the well dry. the failed bid by Pfizer for Astra Zeneca may have been a sign of this.
Problem? no problem! What companies needed was to be asset strippe...er, split, so that corporate bloat could be got rid of, and value realised for investors. Obviously. Happily, the bankers are able to assist, and merrily throw the how thing into reverse, and inso doinfg realise a great deal of proit for their own stockholders.
Keeps on happening, time and again. A few thousand lay-offs per victim won't bother GS and their ilk one little bit.
Nothing new under the sun!
Quite. Just a different bunch of suckers who think they know better than the lost lot to fall for it.
How are your gold and silver positions zerohedgers? Oh you're just going in for more?
Bahahahahahha
Lucky that you diversified into bitcoin this year
Bahahahahhaha
Yeah....and I've got some canned air too.....wanna buy some?
so you're saying wealth insurance is cheaper because everything is fixed, huh the law?
This is more appropriately called economic metastization
Maybe for the best
Once great company, always enjoyed their products
When corrupt management strips company wealth for themselves leaving shareholders holding the vbag, there should be legal recourse -
Since morality no longer holds sway, and the basest of behaviour is now common throughout the land.
How did HP go from being master of calculators like HP35 and HP41C and king of printers with 3P and 4P etc, to being an alsio ran having destroyed CompaQ and become an ink-business ?
It would have been much more logical for HP to merge its printer division with Kodak to build a full-imaging business than the crap it has.
It is going the way of RCA with Felix Rohatyn having delivered it to his bonus scheme every time a transaction crossed his desk
It's complicated.....but suffice to say they borrowed the Enron and Lehman playbook.
Management looked at the R&D budget and considered it all non-value overhead and then hired finance majors to work on accounting schemes to boost "growth".
MOAR GUROATH!!!!
MO POMO TODAY TOO.
So markets up means that this is a GARATE IDEAR!!!
1. Their ad campaign: "Use the computers used at the IRS" probably wasn't a good idea.*
2. Well managed company but we just noticed we have 5,000 extra exployees working here aren't compatible traits.
3. Unless you need to play financial games, why can't HP just structure their internal organization into 2 seperate units?
*I completely made this up. Does anyone know what brand of computer the IRS uses?
TRS-80?
What a fucking shame. Most of you don't know the history of Packard Bell. I have been a long time customer. I automatically by HP products. Management has destroyed the legacy of this company.
My first out of pocket purchased computer was a Packard Bell. Moved to Compaq, then Pallivan. Rock solid units. My core i7 is about 3ish years old. She is a bitch in disquise.
The cloud approach is going to kill off the company. There really is no storage cloud, all marketing bullshit.
It's like many people in Florida who appear to have a big yacht off their backyard dock. Most are renting the dock space for revenue income. The cloud storage space is no different.
What a desructive team groomed from AT&T, McGinn destryed Lucent and Fiorina destroyed HP.
HP will be a no-name company in a few years.
It's management always in crisis mode.
lol HP. What a joke of a company. Can't print black because the printer is running low on yellow ink.
So true, I keep backup cartridges, they think we'll order a new set off the Web firmware suggestion site. Not going to happen.
Lexmark was far more tainted in terms of user exploitation of firmware abuse.
Only in the world of finance can you cut a turd in half and legally market it as not a turd.
Fiorina destroyed HP. It was down from there.
Still waiting for my OEM LJ cartridges to get here from some Amazon vendor.
Slice crApple in 3. Easily worth a trillion that way.
HP used to make decient printers that lasted forever, worked without fail, and produced good prints. The last HP printers and large scale plotters that we bought will be the last printers and large scale plotters that we buy from HP.
If HP wants to do well as a corp. then perhaps they should stop making crappy printers and return to making good printers. That would probably be better than a bunch of MBAs figuring out how to get better bonuses by cutting the company in half and offshoring even more jobs.
Yep.
Someone else will beat their ass.
MBA: the assassins of real value.
got rid of my last HP....terrible product, AWFUL SOFTWARE
Who listens to the crooked bankers advising merger, merger, merger, spin, spin, spin....losing money the entire way. What fools.
PC LOAD LETTER. What the fuck does that mean?
HighPerformance ....buggy-whips....
An Evil Force has taken over the Planet and made too many people think only of Profit, or of Profit First.
Could it be........Satan?
HomObbama permanently stoned
I tossed the last HP printer I'll ever own in the trash a few years ago, and I've been boycotting HP ever since Meg Whitman ran for Governor of California. Her ugly face was everywhere on the TV & newspapers, and I don't want to give her another dime in case she decides to run for office again.
BTW: I own three Canon printers, including a high end large format photo printer, and I'm very satisfied with them.
Another PC unit going to China
eventually.
Like Lenovo