Hewlett-Packard to split into two separate companies

HOUSTON, Texas -- Hewlett-Packard employees, both in the local area and throughout the country, heard about the company’s intention to divest itself into two separate companies, in the social media, after the company revealed its plans publicly to major news sources.

Apparently H-P will separate it’s personal computing and printer business from its corporate hardware and services operations. The announcement left employees who work on these projects, perplexed, as there was no mention of it through any internal communications method, nor at company meetings.

A former local resident, Todd Kruse, who has relocated to H-P’s Silicon Valley headquarters commented on Facebook…

“What the hell is going on?” questioned Kruse.

A co-worker responded with…

“Nice to hear about it here and not from HP,” posted John Gleason. “No mention of it during our meeting in Miami,” he added.

The move follows a pattern of major corporations divesting themselves in an effort to perform more efficiently and cost-effectively, but pressure from investors could be a major factor. eBay, the online auction site, announced last Tuesday that it would spin off its payment processing division, PayPal. This resulted in a favorable response from the eBay’s stockholders.

Coincidentally, H-P’s current CEO since 2011, Meg Whitman, was previously the President and Chief Executive Officer of eBay Inc., from 1998 to March 2008. In 2012 Whitman reorganized H-P, combining the company’s PC business with its more profitable printer division. The company has stated that Whitman remain as Chairman of the PC/Printer business, and CEO of the separate enterprise. Director Patricia Russo, will be named chairman of the enterprise division, and Dion Weisler, a PC/printer executive, will be the CEO.

Hewlett-Packard Co. just appointed CEO Whitman the title of Chairman in July 17 of this year, two days after Ralph Whitworth said he was stepping down as interim chairman to focus on his health. Russo became lead director at that same time.

The upper management appears to have a clear direction,taken a direction encouraged by analysts and investors, it appears that employees were caught off guard by the public announcement.

H-P is no stranger to controversy. Shareholders sued former and current H-P executives and board members, including Ms. Whitman, for paying an over-inflated price for the software firm, Autonomy, in 2011, which led to the departure of then-Chief Executive, Léo Apotheker. The company lost more than $30 billion in market capitalization after this and a series of strategic missteps, and the company stock plunged 47 percent, during his short one-year tenure.

Apotheker was tapped from SAP in 2010, after H-P CEO Mark Hurd was forced to resign after an investigation found he had a personal relationship with a contractor who received numerous inappropriate payments from the company. Hurd was hired by Oracle, who went from an H-P partner to a ‘bitter antagonist’ (according to H-P), for no longer supporting the database software on Hewlett-Packard servers that use the Intel Itanium chip.

Amidst all this controversy, sales continued to drop as did shares, and last year, H-P lost its place as the largest PC maker by shipments, slipping to No. 2 behind China’s Lenovo Group Ltd, according to industry research firm IDC.

To cut costs H-P has laid off tens of thousands of employees, sold off parcels of land and the structures on them, and is contemplating other strategic plans to return to profitability. The company plans to announce the change as early as Monday, October 6; the move is expected to be effected as a tax-free distribution of shares to the company’s stockholders next year according to company sources. It’s not likely that it will be disturbed by annoyed employee comments posted in the social media.