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HP to split into two businesses -- report

Hewlett-Packard plans to separate into two businesses, one focused on PCs and printers, the other on corporate products and services, The Wall Street Journal reports.

Hewlett-Packard CEO Meg Whitman has said there's renewed interest in traditional PCs over tablets in business.
Hewlett-Packard CEO Meg Whitman has said there's renewed interest in traditional PCs over tablets in business. Getty Images

Hewlett-Packard may be ready for a breakup.

HP, the world's second-largest PC vendor behind Lenovo, plans to separate its PC and printer businesses from its corporate hardware and services operations, The Wall Street Journal reported Sunday, citing "people familiar with the matter." The company could announce the move as early as Monday, according to the Journal's sources.

HP declined to comment. (Editors' note, Oct. 6 at 4:33 a.m. PT: On Monday, HP officially announced its plans to break into two companies.)

The split is apparently one HP and its investors have been contemplating for a long time, said the Journal. HP's printing and personal systems group, which includes PCs, tablets, printers and other accessories, pulled in revenue of $55.9 billion during the company's 2013 fiscal year, almost half of its total revenue.

If true, the split could in part be an attempt to help HP move quickly to regain its position atop the global PC market -- it fell to the No. 2 spot behind Chinese computer maker Lenovo last year -- as the decline in that market shows signs of slowing.

"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," CEO Meg Whitman said after the company's second-quarter earnings were released in May. Whitman had previously said the company is seeing renewed interest in traditional PCs over tablets in business.

Even so, HP as currently constituted doesn't have "enough focus on any one area to really dominate," wrote Larry Dignan at CNET sister site ZDNet, in a look at why a breakup of HP would be a good move. Meanwhile, he continued, the "printer and PC division [are] fighting for innovation spending with the enterprise side of the house. That's a lot of hands in an R&D pie that equates to about 3 percent of revenue."

Whitman will be chairman of the new PC and printer business and chief executive of the separate "enterprise company," one source told the Journal, while board member Patricia Russo will be chairman of the enterprise company. Don Weisler, the current executive vice president of HP's printing and personal systems group, will step in as CEO of the PC and printer business, according to the Journal.

This isn't the first time HP has attempted to jettison its PC business. In 2011, former Chief Executive Leo Apotheker tried to spin off the company's PC-making division. Investors rejected the move, and Apotheker was forced out. Whitman reversed the decision when she took over as CEO and began a "multiyear journey" to revive HP.

Update, 12:20 p.m. PT: Adds background on HP.