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HP announces split into two business units

HP announces split into two business units 

In addition to the division, the company will eliminate 5,000 jobs.

The idea to split HP into two businesses was first proposed by former CEO Leo Apotheker in 2011. The company ultimately rejected the idea, and current CEO Meg Whitman replaced Apotheker, declaring that she would not break up the business. Why did Whitman change her mind?

“Make no mistake, one HP was the right thing to do to begin the turnaround of this company,” Whitman said on a conference call about the announcement. “But now … this is definitely the right tactic.”

The corporate hardware and services business will be known as Hewlett-Packard Enterprise. Whitman will be the head of it. Lead independent director Patricia Russo will be the chairman. HP’s printing and personal computing business will be called HP Inc. Dion Weisler, cuurently an executive in that division, will lead it. Whitman will be the chair of HP Inc.

Investors applauded the news. Activist investor Ralph Whitworth, a former chairman of HP’s board of directors, said in a statement, “HP’s board and management have made a brilliant value-enhancing move at the perfect time in the turnaround. The new companies will be better positioned to address today’s light-speed market dynamics and customer needs, and with distinct and compelling financial profiles and strong leadership teams, accelerate growth and shareholder value creation.”

HP’s announcement comes at a time of great change for industry giants. IBM, Microsoft and Dell have all changed their chief executives, sold large parts of their businesses or gone private. Although these companies fared very well in the Internet and personal computing boom, they have struggled to stay competitive in the age of mobile devices and the cloud.

At mid-day trading today, HP’s shares were up by about 4.6%.

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