HP CEO Meg Whitman has switched gears and now says that spinning off the company’s computer and printer businesses is the right move after all. In the process, HP will let another 5,000 people go. That brings HP’s total announced layoffs to as many as 55,000. The company employs roughly 300,000 people worldwide.
Whitman has resisted a breakup of the company, but now that HP’s turnaround is underway she says a breakup is “definitely the right tactic.” She will become CEO of Hewlett-Packard Enterprise, which will include enterprise hardware and services. Independent director Patricia Russo will be chair of the new company.
HP Inc. will be the new name of the company’s PC and printer businesses. That unit will be led by Dion Weisler and Meg Whitman will be its chair. Initially, both HP Inc. and Hewlett-Packard Enterprise will be roughly the same size in terms of revenue.
Some shareholders have been advocating for an HP breakup, and investors reacted positively to Whitman’s announcement, buying HP shares Monday morning. After the breakup, shareholders will own stock in both of the new companies.
Whitman did not elaborate on which parts of the company would be targeted in the latest round of job cuts. Earlier this year, she said that research jobs will not be eliminated and that HP continues to increase its R&D spending. But employees in the server, storage, PC and software divisions may all be candidates for cuts.
Mobile operators buy HP servers and blades for use in data centers, and the company is working hard to develop compelling software solutions for service providers. Earlier this year HP announced an investment in OpenStack software, which has the potential to supplant both its servers and its proprietary software. HP calls its solution HP Helion and says it will focus on enabling companies to manage hybrid IT environments. HP Helion will incorporate OpenStack with existing HP cloud offerings.
