Will Hewlett-Packard Split Its Business?
According to a recent report, Hewlett-Packard is considering dividing its business in an attempt to optimize value to company shareholders.
The blog Quartz said that company directors have “discussed the details of a possible breakup scenario…“
HP’s share price has fallen by 75 percent in just a little over two years, and the company is continuing its restructuring efforts by which, toward the end of 2014, nearly 30,000 jobs will be lost. Shareholders are watching closely, curious if they’ll see a return from the firm.
It’s speculated that the PC maker is undervalued and the act of dividing the business in to several separate companies could be a much healthier profit generator as opposed to one giant business model.
During HP’s recent 10-K filing with the U.S. Securities and Exchange Commission, the company said, “We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives. When we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the achievement of our strategic objectives. We may also dispose of a business at a price or on terms that are less desirable than we had anticipated.“
In older news, HP announced that it would spin off its PC Manufacturing business in the fall of 2011 however, following the release of CEO Leo Apotheker, CEO Meg Whitman kept HP together by reversing the move.
Despite the issues HP is facing, The Wall Street Journal recently cited one of its sources saying “Whitman has no plans to sell the company’s Autonomy and EDS business units…” even thought the company has had several offers from outside firms.
Last year HP said that it bought the company Autonomy based on inflated and fraudulent accounting.
In its fourth quarter filing with the U.S. Securities and Exchange Commission (SEC), HP said that prior to being bought by the company in 2011, Autonomy had engaged in “serious accounting improprieties“. As a result the computing company recorded a charge of $8.8 billion in its software unit. Here’s a quote from HP on the matter, “The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP’s acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term.“
With respect to the Quartz article, HP said the company does not comment on speculation.
It’s noteworthy to mention that HP recently said in a statement regarding Dell’s move to private, “Dell has a very tough road ahead… The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell’s ability to invest in new products and services will be extremely limited… Leveraged buyouts tend to leave existing customers and innovation at the curb… We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.“
[Image via Flickr/donjd2]