HP to cut itself in two

steven-ho-conan-watermelonUpdate: The news has now been confirmed. The Wall Street Journal has penned a piece which claims that the maker of expensive printer ink, HP, will announce that it will split into two today.

HP wants to separate its personal-computer and printer businesses from its corporate hardware and services operations.

The company is expected to make the split through a tax-free distribution of shares to stockholders next year.

If the split happens there would be two publicly traded companies, each with more than $50 billion in annual revenue.

Break-ups are very now amongs big companies.  eBay broke up lately, in part because of a belief that operations with different growth profiles are best managed as separate entities.

HP has suffered sharp sales declines and sees better long-term potential for its corporate hardware and services business than for its printer and PC unit so it is best that its hardware bits were lopped off, the Wall Street Journal claims.

Former chairman Ralph Whitworth said in a text message Sunday that it would be a brilliant move at just the right moment in the turnaround. It would liberate significant trapped value.”

The news has also resurrected the rumoured merger  of HP with data-storage equipment maker EMC. The talks recently ended, but the separation could pave the way for HP’s corporate hardware and services business to be combined with EMC.

It seems that the break-up has been on the cards for some time. HP mentioned the idea in 2011, when it announced the ill-fated acquisition of UK software company Autonomy.   At the time HP said then it was exploring a separation of its PC business, only to decide two months later to hold on to it.