The rumor has turned out to be true. Hewlett-Packard has confirmed that it will be splitting into two separate companies: HP Inc. (computers and printers) and HP Enterprise (servers, software, and services).
“With the first half of our fiscal year completed, I’m pleased to report that HP’s turnaround remains on track,” said Meg Whitman, president and chief executive officer, HP. “With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities. We’re gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape.”
Hewlett-Packard started a massive restructuring back in 2012 with the purpose of streamlining, lowering costs, and become more competitive. Nearly 34,000 jobs were cut since then. The company split will add at least 5,000 positions to the chopping block, bringing the number of layoffs still to come to around 16,000. The final restructuring is expected to be done by the end of fiscal year 2015.
From a shareholder and potential investor standpoint, restructuring the company could have its benefits. A large corporation with split focus can be considered risky by targeted investors. A dip in market share for one business group can scare off investors who may have wanted a piece of the business groups that were thriving. Separating the consumer hardware business from the more profitable, in-demand enterprise hardware and services gives investors a lot more flexibility into which market they put their money.
Wall Street seems to be pleased by this move. At time of writing, Hewlett-Packard stock was hovering at $37.28, up $2.08 or 5.91% since the opening bell.