Hewlett-Packard Co. confirmed on Monday that it is planning to separate its computer and printer businesses from its corporate hardware and services operations in order to increase its overall revenue.
The PC and printer division will carry the name HP Inc., while the corporate services will be called Hewlett-Packard Enterprise, according to the New York Times. The plans are expected to be finalized by October 2015.
The news confirmed an early report by the Wall Street Journal that the company will make an announcement on Monday. Stockholders seemed to support the said move, as it could increase the revenue of both divisions by $50 billion per year. The technology corporation has been struggling with the sales of its computers and printers since 2011, while its corporate and hardware services continue to show potential for growth.
“This would be a brilliant move at just the right moment in the turnaround. It would liberate significant trapped value," Ralph Whitworth, an HP investor and former chairman of the company, said to the Wall Street Journal in a text message.
According to industry research firm IDC, HP lost its top spot as the world's largest PC maker in terms of shipment to Lenovo last year. Sales also dropped by 7.1 percent, and overall revenue declined by 6.7 percent. The company was forced to lay off thousands of employees just to reduce costs.
Investors and analysts have long anticipated the split. Some actually expected that HP would sell its computer and printer division so the company could focus more on computer servers, networking and data storage to businesses, Reuters reported. The idea was rejected by the board in 2011.
"I wonder what would have changed in the board's thinking that previously they thought they needed computers together with services to properly serve large enterprises to now," said Hudson Square Research analyst Daniel Ernst to Reuters.
HP is not the first to separate its businesses. eBay also announced that it plans to split off with Paypal to strengthen the business.
