HP To Separate Into Two Companies; Reaffirms FY14 Non-GAAP Net EPS Outlook

(RTTNews) - Hewlett-Packard Company (HPQ) announced plans to separate into two new publicly traded Fortune 50 companies: one comprising its enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise, and one that will comprise HP's personal systems and printing businesses, which will do business as HP Inc. and retain the current logo. The transaction is expected to be completed by the end of fiscal 2015. Immediately following the transaction, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc.

Meg Whitman, President and CEO of HP, and Cathie Lesjak, CFO of HP, will hold these positions with Hewlett-Packard Enterprise. Dion Weisler, Executive Vice President of HP's Printing and Personal Systems business, will lead HP Inc. as President and CEO.

For fiscal 2014, HP reaffirmed its non-GAAP net EPS outlook range of $3.70 to $3.74. The company updated its fiscal 2014 GAAP net EPS outlook to be in the range of $2.60 to $2.64. Analysts polled by Thomson Reuters expect the company to report fiscal 2014 profit per share of $3.73. Analysts' estimates typically exclude special items.

For fiscal 2015, HP estimates non-GAAP net EPS outlook to be in the range of $3.83 to $4.03 and GAAP net EPS outlook to be in the range of $3.23 to $3.43. Analysts expect the company to report fiscal 2015 earnings per share of $3.95.

HP noted that the outlook does not include one-time GAAP charges the company is expected to incur in connection with the separation, including advisory and tax costs which will be quantified at a later date.

In a related announcement, Ralph V. Whitworth, founder of Relational Investors LLC and former Chairman of Board, welcomed HP's announcement. "Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates," Ralph V. Whitworth stated.