HP reportedly considering company 'break up'

HP reportedly considering company 'break up'

Summary: The board of the world's number one supplier of PCs by shipment is reportedly looking at options to "obtain maximum value for shareholders." One of those options is splitting up the technology giant into smaller companies.

TOPICS: Hewlett-Packard

PC maker HP is mulling over breaking up the company in a bid to return the maximum value to company shareholders.

(Credit: HP)

Sources familiar with the matter speaking to Quartz said that company directors have "discussed the details of a possible breakup scenario," among other options.

However, one source close to the company, speaking to ZDNet, said that the company wanted to "stay as one HP," seemingly dismissing the Quartz report. 

The news outlet's sources say that there is no "overt pressure" to break up the company, and no definitive decisions have been made on the matter. 

But at a time where the company's share price has fallen by 75 percent in just over two years, and the firm continues its restructuring effort—in which close to 30,000 jobs will be lost by the end of 2014—shareholders and investors are at the edge of their seats wondering when they will see a financial return.

Investors are, according to the report, wanting more from their financial contributions and believe the PC making behemoth is worth "much more" than its recent share price. It could be that HP might be a better profit generator and money maker as separate companies rather than one giant company.

According to the company's recent 10-K filing with the U.S. Securities and Exchange Commission, HP said:

We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives. When we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the achievement of our strategic objectives. We may also dispose of a business at a price or on terms that are less desirable than we had anticipated.

This sent a signal suggesting that HP would sell off certain units, such as troublesome divisions that have cost the PC maker money—like Autonomy—or aren't generating profit.

It's somewhat resonant of former chief executive Leo Apotheker's move to spin off HP's PC making division. The move was rejected by investors and he was forced out. Current HP chief executive Meg Whitman reversed the decision and brought the PC making unit back to the top of PC manufacturing tables.

Sources speaking to Quartz said that those vetoed decisions are now floating back into the minds of investors.

Despite the troubles the company faces, sources close to the situation said that Whitman is has no plans to sell its Autonomy and EDS business units, despite numerous offers from outside firms.

HP, which remains at the top of the PC manufacturing leader board, according to recent IDC figures, recently said in its fourth quarter filing with the U.S. Securities and Exchange Commission (SEC) that Autonomy had engaged in "serious accounting improprieties" before it was bought by HP in 2011, and the computing giant ultimately had to swallow an $8.8 billion charge as a result.

A HP spokesperson said that the company does not comment on speculation.

Topic: Hewlett-Packard

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  • I favored it when Leo Apotheker proposed it...

    ...and favor it now. Split HP into three parts and distribute shares of each to the existing stockholders:

    1. PCs and consumer electronics (call it "Compaq").
    2. Consulting services and IT outsourcing (call it "Electronic Data Systems").
    3. Servers, UNIX, VMS, related software, and high end electronics (call it "Hewlett Packard").

    The goal here is to repeal Carly Fiorina and get HP focused again on what it's historically been good at.
    John L. Ries
    • I favored it when Leo Apotheker proposed it...

      Though obviously way more complicated than can be put into a blog comment, that structure actually makes a lot of sense.
      Dell-Bill B
  • HP reportedly considering company 'break up'

    after spending tens of billions of dollars to create a corporation worthy to challenge ibm's hegemony in the enterprise space, the lack of sense of direction from the people at the helm of this once powerful innovator is upon us again. the acquisition of compaq almost always comes up as an excuse to lambast the person who has the werewithal to mount a challenge to ibm in the hope of expanding hp's foot print in the enterprise. compaq first and foremost was not acquired just because of it flagging pc business, but because of its enterprise expertise/customer base plus the treasure trove of ip including that of the once powerful digital equipment. the marriage was a failure since day one because of the internal attack mounted by one of the son of the founder. no integration project however small or any project for that matter will succeed if it is being actively sabotaged by people involved in its execution. sun was seamlessly integrated into oracle since no dumb investor mounted any challenge to the acquisition, same with ibm acquisition of various companies to complete its enterprise suite, etc.
    • Or... maybe it was just a bad idea

      Hewlett opposed the merger with everything he had prior to the merger being confirmed.

      I haven't seen anything to indicate that he sabotaged it after the fact.

      Carly Fiorina herself and most talking heads seemed to think the merger process actually went pretty well for such a large merger: she sells herself using that data point.
      • HP reportedly considering company 'break up'

        you maybe right and i am wrong since i can not support my assertion except with what i gleaned from news reports in those times. there may indeed some confidential information that culminate those kind of behaviour, but the fact that later on the enterprise division of compaq contributed to their bottom lines during their dark hours speak for itself. the opposition was not made in a professional way (through the board room), but through the news media. that alone left me wondering that something was amiss at that time.
  • Once a comglomerate, always a comglomerate?

    It takes great courage, as well as reources and time to admit a company has lost its way and get to grips with a sprawling empire. Google's 'back to the core' shakeup was chicken feed compared to HP's challenge.

    With Apple and Microsoft taking an opposite direction - a single OS to make everything interoperable - must be a temptation rather than face that challenge. And dividing the company isn't so easy; what is the core of HP these days?

    Should be an interesting year at HP :o)
    • Core

      HP core is definitely technology - servers, storage, networking - plus software to manage it. Things like Autonomy really doesn't fit much into that. PC/printers - it will be very hard to separate it from enterprise hardware without big losses, this possibility was already checked and rejected. So what they can separate (apart from some software groups - but this is peanuts)? Make HP services separate company? Maybe. But it wouldn't make much sense, there's no value added in such move. And there is value lost. I don't believe in this break-up rumors, at least not on a big size. Maybe some small groups will be separated, like WebOS last year. But nothing bigger.
      Mr Wrong
      • HP reportedly considering company 'break up'

        maybe like hp letting go of its instruments division (agilent) or ibm letting go of its printing division (lexmark) but not radical chop-chop like the m$ invisioned breakup into three separate entities during the anti-trust heydays. hp can let go of its printing division like ibm, for them to concentrate in whatever core competencies that are left after all of their misadventures. us companies have to stay big and nimble, otherwise they will become small and easily out-gunned by the developing international competition from the pacific rim economies and maybe indian economy in the long haul ...
  • Again?

    There was talk of HP breaking up last summer. Don't remember if it was splitting printers, consulting and computers each apart or something similar.
    When a company splits, it's generally not a good sign.