Hewlett-Packard Board Approves Separation Into Two Companies

(RTTNews) - Computer and printer maker Hewlett-Packard Co. (HPQ) said Thursday that its board of directors has approved its previously announced separation into two independent companies - Hewlett Packard Enterprise and HP Inc.

Hewlett Packard Enterprise, with more than $50 billion in annual revenue, will provide the technology solutions required by customers to optimize their traditional IT, while HP Inc. will be a personal systems and printing company.

Hewlett-Packard expects to complete the separation on November 1, 2015, through a pro rata distribution to HP stockholders of 100 percent of the outstanding shares of Hewlett Packard Enterprise or HPE.

Under the distribution expected to occur on November 1, each HP stockholder will receive one share of HPE common stock for every one share of HP common stock held by them as of October 21, 2015, the record date for the distribution.

As no fractional shares of HPE will be issued, stockholders will receive cash in lieu of fractional shares. The separation will provide HP stockholders with ownership interests in both HP Inc. and Hewlett Packard Enterprise.

In connection with the separation, HP will be renamed HP Inc. and its shares will continue to trade on the NYSE under the ticker symbol "HPQ." Hewlett Packard Enterprise shares will begin "regular way" trading on the NYSE on Monday, November 2, 2015, under the ticker symbol "HPE."

Meg Whitman, chairman, president and chief executive officer of HP, said, "This separation will enable us to accelerate the turnaround we began four years ago. As two independent, industry-leading companies, Hewlett Packard Enterprise and HP Inc. can drive more focused business strategies, innovation roadmaps, and go-to-market models."

HP has been troubled by CEO changes and acquisitions since 2001. The company's contentious merger with rival Compaq Computer in 2001 led to vicious infighting and also resulted in the ouster of Carly Fiorina as CEO.

Her successor, Mark Hurd, who was credited with turning around HP, was accused of sexual harassment against a colleague and also forced to resign as CEO. Following Hurd's departure, HP struggled with falling margins and its failure to establish itself in major new markets such as cloud and mobile services.

HP has also been troubled by its $11.1 billion takeover of British software company Autonomy Corp. in 2011 under Hurd's successor, Leo Apotheker. The company had aimed to expand its business from hardware to software industry through the acquisition.

However, the Autonomy deal turned out to be a huge flop, with HP writing down about $8.8 billion just after 18 months. HP has linked more than $5 billion of the write-downs to accounting fraud and inflated financial by Autonomy executives.

Under Apotheker, HP decided to discontinue its webOS device business and announced a plan to sell its personal computer division, both seen as chaotic attempts to reposition HP. Apotheker was fired by HP's board of directors as CEO in September 2011. He was replaced by current CEO Meg Whitman.

HPQ is trading at $25.70, up $0.09 or 0.35 percent on a volume of 221,395 shares.