Hewlett-Packard Co. is set to split into two businesses as the company plans to separate personal-computer and printer business from its corporate and hardware services operations. The company will make an official announcement on Monday.
According to the report, the division will lead to two publicly traded companies with a turnover of $50 billion in annual revenue. The split will be done through tax-free distribution of shares to stockholders, according to sources familiar with the plan. The move is seen as an attempt by the company to boost revenue.”This would be a brilliant move at just the right moment in the turnaround. It would liberate the significant trapped value,” said Ralph Whitworth, a HP investor.
As HP is facing declining sales it hopes to boost revenue from the corporate hardware and services business than its printer and PC business. Analysts also speculate about deal making in the industry as it was recently reported that the company planned to merge with EMC Corp. that would have made an industry leader with a market value of $130 billion.
Investors had expected the move from HP which almost closed its PC business in 2011 during the acquisition of failed UK company Autonomy Corp. The company had planned to close its PC business and decided to continue after pressure from shareholders. By 2012, HP Chief Executive Meg Whitman revamped the PC business with profits in printer operations and led to the current plan. HP’s Printing and Personal Systems Group reported $55.9 billion revenue in the 2013 fiscal ending in October. Overall, there was a 7.1 decrease in sales and a 6.7 decline in company revenue.
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