Hewlett-Packard (HPQ) to split into two public companies. Stock soars.
Hewlett-Packard聽Co (HPQ) said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations.
HP聽said its shareholders would own a stake in both businesses through a tax-free transaction next year.
Shares of the company, which has struggled to adapt to the new era of mobile and online computing, were up 5.1 percent at $37 in premarket trading on Monday.
Each of the two businesses contribute about half of聽HP's current revenue and profit.
The move will result in a monumental reshaping of one of technology's most important pioneers, which has more than 300,000 employees and is on track to book $112 billion in revenue the fiscal year ending October.
"Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates," Ralph Whitworth, former聽HP聽chairman and founder of聽Relational Investors聽LLC, said in a statement.
Relational owns a 1.49 percent stake in聽HP, which had a market value of about $66 billion as of Friday.
Many investors and analysts had called for a break-up of the company, or a sale of the personal computer business, so that聽HP聽could focus on the more profitable operations of providing computer servers, networking and data storage to businesses.
HP聽is the latest in a line of companies, often under shareholder pressure, to spin off operations in an attempt to become more agile and capitalize on faster-growing businesses.
Online auction company eBay Inc said last week it would spin off electronic payment service PayPal.
WHITMAN TO LEAD ENTERPRISE
HP's current chief executive, Meg Whitman, will lead the new聽Hewlett-Packard聽Enterprise, which will house the corporate hardware and services operations.
Current聽HP聽lead independent director Patricia Russo will be chairman of the enterprise company.
HP's printing and personal computing business, to be known as聽HP Inc, will be led by Dion Weisler, currently an executive in that division. Whitman will be chairman of聽HP Inc.
Founded by聽Bill Hewlett聽and Dave Packard in a聽Palo Alto,聽California garage聽in 1939,聽HP聽was one of the companies that shaped Silicon Valley and the PC revolution.
Lately, however, it has struggled to adapt to the shift towards聽mobile computing, and it has been overshadowed by younger rivals such as聽Chinese PC聽maker Lenovo, which is now the world's No. 1 PC maker by shipments.
Dell Inc, which is聽HP's closest U.S. competitor and facing similar pressure, was taken private by founder Michael Dell last year.
HP's PC business has shown signs of life in recent quarters, growing broadly geographically as businesses replace aging machines.
HP聽on Monday affirmed its fiscal 2014 adjusted earnings of $3.70 to $3.74 per share. It also forecast 2015 adjusted earnings of $3.83-$4.03 per share, in line with the average analyst estimate of $3.95, according to Thomson Reuters I/B/E/S.
HP's announcement on Monday confirmed a report of the split in聽the Wall Street Journal聽on Sunday.
Up to Friday's close,聽HP's stock had risen nearly 26 percent this year. (Reporting by Supantha Mukherjee in Bangalore, David Henry in New York, Edwin Chan in San Francisco and Bill Rigby in Seattle; Editing by Chizu Nomiyama and Savio D'Souza)
