Hewlett-Packard Splits: Why Break-Ups Aren't So Bad After All

PHOTO: The Hewlett-Packard Co. logo is seen outside the companys headquarters in Palo Alto, Calif., in this Aug. 21, 2014 file photo.Paul Sakuma/AP Photo
The Hewlett-Packard Co. logo is seen outside the company's headquarters in Palo Alto, Calif., in this Aug. 21, 2014 file photo.

October is shaping up to be the month of the corporate break-up.

Hewlett-Packard announced today it will split into two separate companies. The news comes just days after eBay and PayPal announced they were going their separate ways after a 12-year union.

Both splits are betting on the premise that they will be better when they're apart.

Hewlett-Packard will spin its personal computer and printing business into one company, which will still be called HP. The remaining business, which will be called HP Enterprise, will include the company's technology products, including data storage, servers and software.

Like any breakup, the road to the realization of "we're better when we're apart" was messy. Weak sales, a 2012 reorganization and tens of thousands of layoffs later, Meg Whitman, CEO of Hewlett-Packard, said the split was necessary to strengthen the business.

"It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders," Whitman said in a statement. "In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, 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."

The split will have to be approved by Hewlett-Packard's board and won't likely happen until the end of next year. Shareholders will own a stake in both companies.

Once complete, both companies will be able to enjoy a competitive advantage in their respective areas and pursue interests they never had the freedom to while together.

Boosted by the profitability of its computing and printing business, company officials said the leaner Hewlett-Packard be able to focus even more so on innovation. The company will have the cash flow to explore emerging technologies and make strategic investments in areas such as 3-D printing, according to HP's statement.

The split will allow the newly named Hewlett-Packard Enterprise to become a "simpler, more nimble partner" to its corporate customers, the company said. It is also expected the separation will reduce debt at the operating company level, allowing HP Enterprise the freedom to make investments in next-generation areas that could help drive future business.

Whitman will become president and CEO of Hewlett Packard Enterprise and will remain chairman of the board of Hewlett-Packard Inc. Dion Weisler will assume the duties of president and of CEO of Hewlett-Packard once the split is official.

It seems even shareholders were heartened by the news of the breakup. Shares of Hewlett-Packard rose $2.11 -- 6 percent -- in pre-market trading.

The Associated Press contributed to this report.