
Hewlett-Packard Plans to Break in Two - dctoedt
http://online.wsj.com/articles/hewlett-packard-plans-to-break-in-two-1412530028?mod=djemalertTECH
======
gergles
Relevant parts of the article, since it's paywalled:

> Hewlett-Packard Co. HPQ +2.00% plans to break in two, separating its
> personal-computer and printer businesses from its corporate hardware and
> services operations, according to people familiar with the matter.

> The company plans to announce the move as early as Monday, the people said.
> It is expected to be effected as a tax-free distribution of shares to the
> company’s stockholders next year, one of the people said.

> The move is one H-P and its investors and analysts have long contemplated.
> It would come amid a wave of breakups and spinoffs at technology companies
> and in the wider corporate world, underpinned by the idea that companies
> with a narrower focus perform better. The moves in many cases have been
> well-received by shareholders—if not actively sought by them.

> Ms. Whitman will be chairman of the PC and printer business and CEO of the
> separate, so-called enterprise company, one of the people said. Current lead
> independent director Patricia Russo will be chairman of the enterprise
> company, while Dion Weisler, an executive in the PC and printer operation,
> is to be CEO of that business, this person said.

> In fiscal 2013, the printing and personal systems group, as it is known,
> inked $55.9 billion in revenue, about half the Palo Alto, Calif., company’s
> total. Sales for the operation dropped 7.1% amid fierce competition,
> compared with a 6.7% decline for the company as a whole.

> Last year, H-P lost its place as the largest PC maker by shipments, slipping
> to No. 2 behind China’s Lenovo Group Ltd, according to industry research
> firm IDC.

~~~
pinaceae
so they bought EDS, turned HP into IBM services (cheap, outsourced shit), and
now they spin it off again. makes sense, EDS employees still have their old
personnel numbers. plus they never consolidated their ERP systems.

the full blown write-off of the 11bn of autonomy is in there as well.

~~~
godzilla82
Apart from the services business that HP inherited from EDS, it also has the
server business, that would now go to the HP services unit.

------
crapshoot101
The most amazing thing for me of the piece is the realization that HP still
had $110B+ in revenue last year - its a useful reminder to us (put myself
squarely in this category) of some of the behemoths in the valley that get
short shift at times in the "Silicon Valley" PR ecosystem. There's apparently
some interesting research still going in HP labs - one smart friend moved out
here to work on Memristors with them (over multiple alternatives), because
they had backed the work for a while.

~~~
porsupah
Might you know what HP's current stance on memristor research is, by any
chance? It's one of those technologies we've all seen simmering away
hopefully, and HP's been (or, perhaps, was?) one of the few large SV
corporations with an interest in longer-term R&D.

~~~
sliverstorm
Well, they were boasting about it just this summer

[http://arstechnica.com/information-technology/2014/06/hp-
lab...](http://arstechnica.com/information-technology/2014/06/hp-labs-machine-
dissolves-the-difference-between-disk-and-memory/)

~~~
porsupah
Thanks for that. With the vulnerability of R&D, I'd feared the group may have
been sidelined. I noticed they're claiming to be preparing to ship memristor
DIMMs in 2016 - hopefully that's a genuinely commercial roadmap, rather than
RSN.

------
otterley
I really hope they name the spun-off computer division "Compaq."

~~~
lallysingh
Or one company's Hewlett, and the other Packard?

~~~
Bud
Personally, I am hoping for "H" and "P".

~~~
cr3ative
They'd save a lot of money on new logos and letterheads by just flipping their
existing logo upside down. HP and DY. It'll be fine.

~~~
kps
The upside-down hp was the logo of a subsidiary, DYNAC (1956–1958) renamed
DYMEC (1958–1959) and finally resorbed as the Dymec Division (1959–1967) of
HP.

------
Tomte
There was a time when HP believed it was a big supertanker, impossible to
steer.

So they split up. Agilent was born.

Shortly after that a new CEO believed, HP needed to be bigger. So they bought
Compaq.

Now they are too big again.

"All of this has happened before. And all of it will happen again."

------
tonyplee
I worked for HP in early 90.

At that time, I remember old HP (mainly instrumentation groups now Algilent)
had a rule of if a product line is > $100mil. They will spin it off to a
separate P/L division. It seems like a good sharding algorithm for scaling out
a corporation.

They stopped doing it after PC/Printer div/group. A cynical view was it was
good for high level corp managers to hide the cost of fleet of corporate jets
into the billions $ revenues with almost no profits.

~~~
joezydeco
Looks like it's back. Agilent is spinning off the measurement group into a
company called Keysight. Announcement was 2 weeks ago.

[http://www.agilent.com/about/companyinfo/company-
separation....](http://www.agilent.com/about/companyinfo/company-
separation.html)

~~~
HeyLaughingBoy
dafuq? I was just getting used to the dumbass name "Agilent."

~~~
joezydeco
It's been 15 years.

------
adventured
It really bothers me what has been been done to HP as an engine of innovation
and product development. It's extremely similar to what the leadership at IBM
has done to that company the last ~15 years.

I feel like the destiny for both of these companies is to slowly be split into
ever smaller pieces until half of those pieces are eventually acquired by
other US or Chinese firms for dirt cheap (and nothing against Chinese firms,
rather, they'll find value in what IBM / HP are throwing away through
negligence).

Profit milking, EPS goosing, bad acquisitions, and financial engineering are
all the leaders at HP and IBM seem to know how to do. The MBAs took over
engineering cultures, and this is the result. (contrasted with actually
creating new products the market wants and generating new profit streams and
new growth)

~~~
kqland
And that's why we must understand that at executive level gender does not
matter. What matters is strategy and ability to execute. When HP announced
"Meg Whitman" as CEO everyone was so voraciously attacking how HP is is being
in bad condition because of male CEOs. Being male does not matter. Whitman has
failed tremendously. Not only HP has laid off thousands of people from US (
some of them I knew personally very well ) and increased offshoring in India
and Philippines but also they now seriously lack true culture of invention. I
studied APM at Stanford and HP case study was presented repeatedly as how it
went from Inventor's Org. to control structured Org. I was recruiting at major
( top 20 ) universities and from many places I got feedback that young people
deliberately avoid joining HP. Those who have left in HP are in survival mode
and always worrying if they are next in round of layoffs.

So when feminists advocates claim that female CEOs are better than male CEO
answer is simply NO. At highest level you want someone who can not only steer
the ship but take everyone along with you without loosing them.

If I was major investor in HP, first thing I would ask is Whitman be removed
from CEO position. Get new energy in. Since cultural changes don't happen
overnight implement strategies to go from Operational ( Control ) based
Organization to Inventor's Org.

I will certainly not consider next CEO based on gender and would not bring
someone in just because she has vagina.

PS - Sorry if this came as too bold but I could not resist myself.

~~~
hackuser
> Sorry if this came as too bold but I could not resist myself.

No need to apologize, and the problem isn't boldness but what I think is a
lack of factual basis and a bit of a rant:

1) I haven't seen anyone, including feminists, claim that female CEOs are
better and certainly not that they are necessarily good managers (I'm sure you
can find someone to back any statement, but it's certainly a very small
minority).

2) You imply Whitman was chosen to run HP because of her gender Do you have
evidence? At least she has a very impressive resume and is fully qualified.
EDIT: And you imply that people with the opinion in #1 caused that to happen;
it's very hard to believe that is true or that they even have the influence to
affect the choice of HP's CEO.

3) The necessary assumptions behind #1 and #2 make your statement read as if
you believe there is some sort of conspiracy favoring women in tech and you
are pushing against it. I'm not saying you believe that, but the argument
looks that way.

If there is a conspiracy to promote women in tech, it is doing very poorly.

I agree with this statement: Cultural changes don't happen overnight.

~~~
kqland
Oh, did I hurt feminist inside you ? Here are claims[0] from prominent
national news organization and many many reputed sources.

So that addresses your question #1.

#2. You are twisting the words. I said when "When HP announced "Meg Whitman"
as CEO everyone was so voraciously attacking how HP is is being in bad
condition because of male CEOs". It is not same thing as saying Whitman was
chosen because of her gender. My point still stands though. In her tenure of
last three years she has failed to turn around HP from lost focus despite
whatever claim you see. Here is latest news on more layoffs from May [1] So
she is doing no wonder than some male in same position being as CEO.

#3. I don't know about conspiracies and I would never see myself assimilate
with one. But, here is thing I can tell you. Circle of powerful people do
definitely want more women in powerful position. HP, Yahoo, IBM, Oracle(
recently ) on and on. I don't know if these efforts are to get more women in
tech industry or something else but there are sustained efforts across US for
sure.

Regarding your claim "few women in tech industry " is blatantly false. I
worked for four Org. on east coast. 8 out of 10 IT managers are women. 7 out
of 10 women in mid to senior level mangagement up to VP.

This is not case of any one company , rather I would say there are more women
in management than men.

I don't form my opinion from sustained campaigns run by someone and I
certainly look far beyond San Francisco hypocrites.

[0]
[https://www.google.com/#q=woman%2B+ceo%2Bbetter%2B+than%2B+m...](https://www.google.com/#q=woman%2B+ceo%2Bbetter%2B+than%2B+male)

[1] [http://www.nbcnews.com/business/business-news/hp-plans-
more-...](http://www.nbcnews.com/business/business-news/hp-plans-more-job-
cuts-ceo-meg-whitmans-turnaround-effort-n112486)

------
shepard
I predict we will see more of this.

There was a reason for conglomerates in 1960-70s: shortage of capital meant
that cross-subsidizing one division by another was the only viable way to
finance growth. These days are long over.

Nowadays, it makes much more sense to operate unrelated businesses as
completely independent companies, with different set of managers _and_
investors.

~~~
pinkyand
Not sure. A lot of the success of Samsung in the smartphone market is due to
vertical integration. They save around 10-15% of bill-of-materials cost
reduction due to this, they sometimes have unique components(like being first
with HD-oled display), they have more control over manufacturers(as a
condition for using a Qualcomm processor, they wanted the processor to be made
at a Samsung fab), They are less exposed to tight supply in components like
ram/flash, And who knows what other benefits they have due to this.

Those advantages are a big reason to why they have better access to carriers -
meaning much better marketing - and the reason behind their ability to push
volumes, create brands, and manufacture so many variants to compete better
than others.

~~~
shepard
Indeed, you are bringing very interesting points:

\- vertical integration (and tighter control over quality / schedules) for
technology companies, and

\- size/scale as an advantage in Marketplace.

We have seeing both of these in play, not just with Samsung: Apple is
designing their own CPUs, and you can argue they leverage their size to help
iTunes and Apple Pay businesses.

Still, there are counterexamples: NVIDIA (and many other successful companies)
are fabless, and AMD divested their fabs (by splitting into AMD and Global
Foundries).

What HP seem to be spinning off is their consulting arm and the enterprise
hardware businesses, where vertical integration/size doesn't matter that much.

~~~
shmerl
It can have its downsides. For example Nvidia didn't manage to push 16nm chips
into their latest Maxwell cards because plants that they use for manufacturing
were already booked ahead. Intel on the other hand use their own plants and
can decide things more flexibly.

~~~
sjg007
If anything at scale you should own the whole chain.

------
maxerickson
2 years ago I said _One of HPs many personalities wants to be IBM_. Another
step along that path (of course, it makes sense to not bother too much with
consumer computer stuff when Apple is dominating the high margin side and
everyone else is looking for ways to lose money).

[https://news.ycombinator.com/item?id=4808974](https://news.ycombinator.com/item?id=4808974)

------
namityadav
Can we please have a rule against posting paywall links? I know we can find a
cached version or search on Google or whatever, but it's still frustrating!

I am not asking for a work-around to access WSJ articles. I'm asking HN to
consider blocking domains that force users to pay money to access their
content.

~~~
dctoedt
> _Can we please have a rule against posting paywall links?_

Can we please stop already with the complaints about paywalls? Diligent,
thoughtful journalism doesn't happen for free; it's great when HN links can be
read for free, but paywalled links shouldn't be second-class citizens.

~~~
gabriel34
I disagree, firstly on your call to stop complaints. Anyone should be able to
question the status quo. Secondly, I disagree on treating paywalled links the
same way "normal" links are treated because this breaks functions of the web.
I dislike sites that allow indexing but hide the content from users of
indexing sites, like scribd, which contents can be found on a search, but is
behind a paywall when you try to access it. This breaks search engines, and
this breaks HN. This practice breaks other sites and uses them as advertising
spots.

~~~
WoodenChair
> This breaks search engines, and this breaks HN.

Paywalls might arguably break Hacker News (although that's debatable) but they
certainly do not break search engines. The job of a search engine is to index
_all_ content. It makes no guarantee that you will not have to pay for the
content it indexes. It only claims that the content it finds is relevant to
your search.

------
q2
How is this different to the strategy/plans outlined by HP's previous CEO Leo
Apotheker before he got fired abruptly?

[http://en.wikipedia.org/wiki/L%C3%A9o_Apotheker#Hewlett-
Pack...](http://en.wikipedia.org/wiki/L%C3%A9o_Apotheker#Hewlett-
Packard:_2010.E2.80.932011)

~~~
wittekm
It's been a while, but I think Apotheker's plan was a two-parter:

* to kill off / sell off the consumer division

* to just turn HP into an IBM-type enterprise company.

The former isn't exactly true in this case; the latter is coming true.

~~~
fuzzythinker
The former is in reality the same. It's just splitting the consumer division
off (selling it to current share holders) is much easier than trying to find a
buyer for it.

------
ghshephard
The argument against unbundling a couple years ago was that the server/desktop
divisions were able to leverage the volume they purchased hardware on, and the
obvious synergy in having the desktops/printers open up a channel for servers
and software services. Not to mention the value in having a single sales,
finances, sales, ordering, procurement, manufacturing division.

I'm wondering if this argument has changed? Looking very forward to hearing
what the rationale is.

------
krylon
Can somebody enlighten me on where HP's high-end server business is going in
the long run?

I read recently that they announced they would stop developing VMS in about
2020 and sold the VMS business off to some other company (which in turn might
port VMS to x86_64 eventually). So at the high end, what remains after killing
off HPPA, the Alpha, Tru64?

HP-UX and NonStop on Itanium? I am not being sarcastic, I am seriously asking.
My impression so far is that Itanium is either slowly going down (Microsoft
and Red Hat stopped porting their systems to IA64 a couple of years back) or
simply replacing what HPPA used to be - but in that case it would appear they
burnt a whole lot of money for nothing, except that now they are depending on
an outside vendor. And Intel, as far as I can tell, does not seem to like
Itanium too much, HP seems to be the only company buying them in substantial
numbers, and there were already rumors Intel would cease development of IA64.

So where is all this going? Would it make sense for HP to buy the Itanium from
Intel and continue developing and building them on their own? Could they pull
it off as far as engineering and manufacturing go? Would it make sense to port
HP-UX and NonStop to some other architecture?

------
jgalt212
Reminds me of how during the last bubble, HP spun of its unsexy device and
medical equipment making divisions (as Agilent) in order to recast itself to
the public markets as a sexy Internet company.

[http://en.wikipedia.org/wiki/Agilent_Technologies](http://en.wikipedia.org/wiki/Agilent_Technologies)

> In 1999, product lines not directly connected with computers, storage, and
> imaging were grouped into a separate company (Agilent), the stock of which
> was offered to the public in an initial public offering. The Agilent IPO may
> have been the largest in the history of Silicon Valley at the time.

Since 11/26/99, HPQ is -24% and A is +40% (both pretty lame 14Y returns)

[http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&c...](http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1412542014984&chddm=1462731&chls=IntervalBasedLine&cmpto=NYSE:HPQ&cmptdms=0&q=NYSE:A&ntsp=0&ei=K64xVNj6E4GUsge8r4DYDA)

------
dannynemer
Both eBay and HP announce splits within six days of each other. Corporate
unbundling.

~~~
Ricapar
Now only if telecoms and cable companies would hop on the bandwagon :)

------
robomartin
I have been an HP customer for about 30 years. I have purchased test
instruments, calculators, printers and computers from the company. Some of
these products are still with me. For example, my collection of HP calculators
starting with several HP-41's up to the current HP Prime. Even a 30 year old
HP-41 works and feels as when it was new. Also a range of digital voltmeters,
signal generators and scopes. With minor maintenance (replace dried
electrolytic caps) good as new.

HP used to stand for uncompromising quality. At least that was the theory.
I've owned a range of HP printers, tarting with the original LaserJet, up to
the LaserJet IV and a pile of ink jets.

As I said, I also owned a range of computers, mostly a pile of laptops and
probably one desktop (the only factory assembled desktop I have ever
purchased).

After a while I think I was buying HP out of habit. I say this because their
quality has consistently disappointed for the last, say, 15 to 20 years. They
went from, to borrow from Mercedes, "The best or nothing" to seemingly
building some of the worst crap out there.

Their calculators went from superb to crappy displays and even crappier
keyboards. Their printers might work OK but the software and drivers have been
horrific for years. On the computer front, I used to buy laptops by the dozen
for my business but stopped because of simultaneus failures after N years of
use. In contrast, products from companies like Acer and Asus keep on ticking
through thick and thin.

To address the split. I hope this means returning to some of HP's roots when
it comes to design, quality and superior performance. If that isn't one of the
objectives they are going from one "me too" company to multiple "me too"
companies. Next year we are already planning to toss out some of our HP
printers and laptops in favor of other brands. They no longer stand for what,
ultimately, were the reasons to remain loyal customers.

------
walterbell
Which division gets the memristors?

~~~
nandhp
Which division gets the calculators?

I learned about the HP-12C today, which appears to be the TI-83 of finance:
"The HP-12C is HP's longest and best-selling product, in continual production
since its introduction in 1981" ... "In 2008, HP modified the design so that
new production runs contain an ARM processor which runs an emulated version of
previous chips."

[http://www.hp.com/calculators/](http://www.hp.com/calculators/)
[http://store.hp.com/webapp/wcs/stores/servlet/PDPStdView?cat...](http://store.hp.com/webapp/wcs/stores/servlet/PDPStdView?catalogId=10051&productId=501424&storeId=10151)
[https://en.wikipedia.org/wiki/HP-12C](https://en.wikipedia.org/wiki/HP-12C)

~~~
krupan
When I left HP around 6 years ago there were maybe 3 HP employees left working
on calculators, no joke. They were doing their best to keep the dream alive,
but they just didn't have a lot of backing or resources.

~~~
yitchelle
They would be mostly managers handling outsourcing contracts...

~~~
krupan
Yes

------
tenpoundhammer
I'm excited I think this break up will be revealing in the mid term showing
the insane revenue declines in personal computers and printers( still
profitable though) , and then showing how little revenue is actually flowing
through enterprise business, but how fast it is growing.

It's been a long time HP strategy to use the revenue in device sales and the
growth in the enterprise to keep the stock prices strong. If you break those
two up you show two businesses with big upsides and big downsides.

Should be interesting to see how the markets react to the separated numbers.

------
jeffreyrogers
Also worth noting is that Ebay has just recently announced a split (splitting
Ebay and PayPal), and many are suggesting that Cisco split into two businesses
as well.

~~~
kordless
Yeah, they know: [http://www.zdnet.com/john-chambers-predicts-brutal-
consolida...](http://www.zdnet.com/john-chambers-predicts-brutal-
consolidation-of-it-industry-at-start-of-cisco-live-7000029622/)

------
teddyh
See _A Short History of HP_ :

[http://www.icanbarelydraw.com/comic/365](http://www.icanbarelydraw.com/comic/365)

------
raspasov
They should break off HP Labs and make this real faster :)
[http://arstechnica.com/information-technology/2014/06/hp-
lab...](http://arstechnica.com/information-technology/2014/06/hp-labs-machine-
dissolves-the-difference-between-disk-and-memory/)

------
italophil
Both IBM and Sony sold their PC business. Dell showed us how well stand alone
PC business with low margins fares on the stock market.

I wonder why HP toke a different approach, no buyer, no immediate need for
cash or something else?

~~~
adventured
They definitely don't need cash - they got back to a $5b profit last year;
$14b in cash; $9b in long-term investments. They do have a mediocre balance
sheet at best, but in the current (temporary) low-cost-of-debt environment,
they likely aren't worried about cash vs debt.

I'd go with the 'other' category. Either buyers won't offer what they think
it's worth, or they liked the synergy with printers (and now they get to spin
off both simultaneously).

------
jil141
Nice! Maybe I can now consider buying some HP hardware again. I have been
boycotting the whole company because of the poor service of their services
unit.

------
ricardobeat
Paywall.

~~~
cpncrunch
Just search for "Hewlett-Packard Plans to Break in Two" in google. I wish
people would stop posting these paywalled articles, as there are lots of other
non-paywall sources for this story.

------
pjmlp
It is sad seeing this happening.

I used to enjoy HP printers and HP-UX was the only commercial UNIX I ended up
using across multiple employers.

~~~
vram22
HP-UX was a pretty good Unix OS. I worked on it for a while at a company years
ago. I liked those PA-RISC machines. Pretty rugged and reliable. Did some Unix
sysadmin work on those machines for a while. Managing 4 to 5 HP-UX servers,
running Informix Dynamic Server, IBM MQ Series and many C, ESQL/C and Informix
4GL apps, later Java servlet and J2EE apps, an early Netscape Java app server
(from Kiva, and it even had JavaScript or LiveScript in the server, IIRC -
this was all a bit before J2EE first came out, i.e. very early days of Java).
All good fun and learning.

HP also had some good Unix tools that were only on HP-UX, AFAIK. Ignite-UX was
one of them. It allowed you to set up a configured OS (base OS + kernel
parameter customization, patches, etc., init and shell scripts) and then image
it onto multiple other machines very easily. Had a real need for such a tool,
googled and found it on an HP site. Then installed and used it. The work went
like a breeze. I guess there may be tools like that nowadays for Linux and
other UNIX-like OSes.

Yes, sad to see this happening to HP. Many years back they had really solid
products and tech, and I've read that they were called "the engineers'
engineers." I worked in a company that had a joint venture with HP for a
while, so saw some of that first-hand.

------
hungarian-eel
Calculator division, and lab instruments divison?

~~~
fnordfnordfnord
Long abandoned, and already spun off (Agilent).

------
knackernews
Sigh ... If only Mark Hurd remained at the company.

~~~
krupan
They'd still be burning the furniture to make quarterly numbers look good?
Mark Hurd had no idea what to do with an engineering company. Making numbers
look good by cutting costs and reallocating assets was his only skill.

