The Biggest Split Of The Year!
Hewlett Packard (HP) is no longer the same old company as we might remember it, well at least not all of it! After 76 years HP has put an end to an era where it was a single tech company and has decided to split into two publicly traded companies.
on November 24th HP reported earnings as a combined company for the last time (it wasn’t pretty, with revenues down almost 10%) and, for the first time, the two new companies gave their future profit expectations. The two companies will be called HP Inc. and HP Enterprises.
This is exciting news from a company that has been criticized for their lack of innovation. HP Inc is going to continue selling PC's and printers as they have been and HP enterprises is going to try and take it a step further by focusing on data storage i.e "The Cloud."
Both these companies are going to have a lot of challenges to face if they are to gain investors confidence. A stronger US dollar has been taking a toll on HP's overseas sales, resulting in fewer profits and a lack of innovation has got consumers looking elsewhere.
This split gives HP a great opportunity to divide their focus on two different segments. They need to capitalize on the 3D printing market and HP Enterprises needs to either create or buy the right technology that's going to propel them in the Date Storage sector, much like Dell has done recently with EMC.
I emphasize buying the right technology since their previous acquisitions have failed one after the other. Most notably, their acquisition of EDS which cost them $13.9 billion in 2008 followed three years later with their buy of Autonomy, the software company for $11 billion. Both of these purchases resulted in $8 Billion write downs each
How will the company preform after the split? only time will tell but one can only hope they take a turn for the better!
What do you guys think? Is this the answer to HP's problems or are they just treading water at this point? Do you think they'll be able to capitalize on the cloud?
Replace Whitman with Carly and all problems will be solved.
These guys were buying and buying and buying other companies only to realize that they're too big and need to be cut into 2 pieces. HP. LOL.
Wonder how much in fees they've paid to IBs over the years..
IB's have been banking on their business for years! also their acquisition of Compaq is one that still baffles me. It's debatable when their decline began but I personally believe it was with the purchase of Compaq. They should follow in Sony's footsteps and just get rid of their PC division.
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