Maybe it had to happen sooner or later, but one of the USA’s top tech companies is splitting right down the middle. Though it only makes up about half of the company’s current business, for years now Hewlett-Packard’s better performing computer and printer business has been carrying water for its hardware and services division.
Now the company says that lesser-performing division will have to make it on its own. Recently the company announced that it would be splitting into two companies, though current shareholders would be given shares in both businesses.
If you think this sounds like a radical restructuring, you would be in good company. It is an extreme plan, made even more so – particularly from a PR perspective – as tens of thousands of employees were given pink slips. Still, investors are ecstatic, driving HP’s shares up nearly 5% as soon as the announcement was released.
While this news caught many tech industry insiders off guard, maybe they should not have been so surprised. After all, HP is currently four years into its five-year restructuring plan. The end goal has always been to help the company reset in order to adapt to the modern era of mobile computing.
As part of this news it was announced that current CEO, Meg Whitman, will be given the task of heading up the corporate hardware and services spin-off, Hewlett Packard Enterprise. While this might be seen as a giving a good chief executive a tough (perhaps impossible) task, Whitman appeared upbeat and excited about the move. In a statement to the media, Whitman said the split allowed both firms to have “the flexibility they need to adapt quickly to market and customer dynamics.”
That could be true, and it could be PR doublespeak for “we’re in trouble.” She followed up her previous statement by asserting that each division can now “more aggressively go after opportunities created by a rapidly changing market.”
That’s definitely saying a lot about nothing. What opportunities … and how? What’s changed? If the same people are in charge of the same division, what, exactly, was slowing HP down before? One thing is certain, both new divisions will see increased marketing and branding costs. In the beginning they will BOTH have to rebrand. That, alone, will come with steep up front costs. Then they will have to compete in their respective markets without the benefit of HP’s massive market presence. How much have they sacrificed to streamline and reorganize, and how much will that cost them? The market will answer that question for all of us soon. The interesting thing will be what HP has to say about it.