For the past few years, Hewlett-Packard has laid off thousands of its employees due to decreasing sales as consumers shifted to using mobile devices when performing basic PC tasks. This resulted to a curbed demand for the company's products such as desktop, laptop and printers.
Talks about the breakup have been going on for over a year. Other companies have done the same strategy which they believe would help them sharpen their focus in an aim to satisfy shareholders. Recently, online-auction giant eBay announced that it will spin off its payments-processing unit PayPal.
"The major benefit I see in the move is that the enterprise business will have a singular focus on the data center, and the PC and printer business can be a lot speedier and agile," said Patrick Moorhead, president of the tech analyst firm Moor Insights & Strategy. He added that HP's PC and printer business should be well funded in order to remain competitive in both the consumer PC market and smart home markets.
Hewlett Packard may announce the split as early as Monday. Often touted as one of technology's most important pioneers, the HP breakup could be described as a monumental reshaping of a company which still employs over 300,000 employees and is foreseen to gain $112 billion in revenue for the fiscal year.
Half of the company's revenue and profit are attributed to its printing and personal PCs business. In August, HP achieved an improved sales record when PC shipments resurged and helped boosted the company's year-over-year revenue by 1 percent to $27.6 billion. HP's Personal Systems group which includes notebooks and PCs were reported to have achieved 12 percent in growth during the same period.
CEO Meg Whitman has tried to steer the company's business into the increasing demand for cloud-computing systems. In 2012, she has managed to merge the PC side of the business with its more lucrative printer unit.
"We're gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape," said Whitman.
Sources say that Whitman will act as chairman of the new PC and printer business and will also be chief executive of the separate "enterprise company." Dion Weisler, HP's current executive VP of its printing and personal systems group will act as CEO of the PC and printer business.
Last year, HP also had talks with EMC Corp, a data-storage giant, on plans of merging the two companies. However, the negotiations ended recently as it lacked support from shareholders.
