Everybody has sometimes heard mention about Hewlett-Packard (HP) and when they hear letters HP, they will automatically connect those letters with Hewlett- Packard, one of the biggest information technology companies. The Hewlett-Packard is well known for their computers, printers and other IT-products and I think everyone has used an HP computer or a printer some point of their life.
Now this well-known company, Hewlett-Packard has announced to turn to two different companies. One focused to personal computers and printing business and another company will focus much more providing services to the corporate customers. After separation, current shareholders will own stocks from both companies. The split is expected to be carried out by the end of 2015. This will need an approval of the company board.
How will this new arrangement help the company?. Now after the separation HP has two separated companies which will help them to focus on the core business of both companies . With this move HP tries to answer to completion in the market. Meg Whitman, the CEO, Chairman and President of HP stated in the company press release “…we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders.”
Let’s see how this will turn out in the long term. There is always a chance to go into a good or bad directins after a corporation separates some business areas into two different business areas. Now these two companies will be on their own and both companies are trying to make good result in their own business area.
But the coin has the flip side. This new arrangement will need funding and this will generate more costs. Almost the last four years HP has been executing their plan to reduce costs. One way of doing this has been cutting jobs. The earlier estimated number of layoffs for a five year plan from 2011 was about 45000-50000 people. After the new plans they layoffs have been estimated to be around 55000.
In this economic situation, it’s very good that the company has a positive outlook to the future and they are ready to try to manage and find new solutions to create business. Let’s hope that saving costs are invested wisely and this savings will help the company in the future.