Hewlett-Packard plans splitting into two

SAN FRANCISCO: Hewlett-Packard Co plans to split into two separate companies, a personalcomputer and printer business, and corporate hardware and services operations, a person with knowledge of the matter said.

The company was to announce the move yesterday, said the person, who asked not to be identified because the plans aren’t public.

The break-up will be a tax-free distribution of shares to shareholders next year, according to the Wall Street Journal, which first reported the split-up of Hewlett-Packard yesterday.

The separation of Hewlett-Packard into two businesses has been floated as an idea before.

In 2011, chief executive officer MegWhitman ended plans by her predecessor Leo Apotheker to spin off the PC unit.

A split would be a major turning point for the iconic company, which was founded 75 years ago by Bill Hewlett and Dave Packard in a garage in Palo Alto, California.

While Hewlett-Packard put Silicon Valley on the map and spawned other successful technology companies, it and other rivals such as Dell Inc and International Business Machines Corp are facing major transformations as the industry shifts away from traditional computing to mobile devices and Web-based software.

Efforts to spin.off businesses are gathering steam at other technology companies.

IBM has been shedding its hardware operations, including the sale of its PC unit to China’s Lenovo Group Ltd in 2005, and last month, EBay Inc. announced that it would spin off its PayPal unit.

EMC Corp, a maker of storage computers, is exploring strategic options that could include a full or partial sale, or a spinoff of VMware Inc, and has also held merger talks with Hewlett- Packard, people familiar with the matter have said. The idea of Hewlett-Packard spinning off or separating the printers and PCs businesses came up in those discussions, a person familiar with the matter said.

The idea would have been to have a combined company focusing on areas such as storage, servers, software and security, the person said.

Sarah Pompei, a spokesperson for Palo Altobased Hewlett- Packard, declined to comment.

Whitman will be CEO of the enterprise business and chairman of the PC and printer company, the newspaper reported. Current lead independent director Patricia Russo will be chairman of the enterprise company and Dion Weisler, the vice president in charge of the PC and printer operation, will become CEO of that business, the Journal reported. — Bloomberg