Last October, Hewlett-Packard released initial details of a pending split that will result in two companies: HP Inc., which will consist of the computer and printer unit, and Hewlett Packard Enterprise, which will handle business hardware, software and services.
H-Ps past practice of growing big at any cost may have become a talking point in the Republican party’s most recent presidential debate, writes The Wall Street Journal. For investors, a more relevant question is where the massive company is headed, given its plans to split into two slightly less massive companies.
The split will reportedly take place in November, writes Fortune.
Investors got their first taste of that future at an analyst meeting last week. There, H-P issued forecasts for the two businesses for the coming fiscal year. According to The Wall Street Journal, the resulting view was a “mixed bag.”
The WSJ states that “growth prospects are still modest, at best.”
Hewlett Packard announced it will lay off up to 30,000 employees ahead of the split. HP estimated that 25,000 to 30,000 layoffs will come from the Hewlett Packard Enterprise unit and up to 3,300 from HP Inc.
A series of enormous layoffs drags down morale, creating a toxic work environment, writes the website Seeking Alpha.
Oracle may be tempted to buy Hewlett Packard Enterprise, but the deal will ultimately benefit Oracle more, according to Seeking Alpha.
HP Inc., which will take the personal computer and printer businesses, still projects overall revenue to decline next year, according to WSJ.
The other business, Hewlett Packard Enterprise, believes that in the longer term, it can hit a “global GDP-like growth” rate — implying low-single-digit expansion.
Other hardware firms (i.e. Apple) are more attractive to investors, states Seeking Alpha.
The layoffs will cut approximately 10 percent of Hewlett Packard’s employees worldwide, and H-P executives expect the restructuring to result in nearly $2.7 billion annually. The announcement has led to speculation that Hewlett-Packard may be considering selling off certain divisions in an effort to prevent additional corporate restructuring in the future.