Meg Whitman shelved plans to spin off Hewlett-Packard Co.’s personal-computer business when she became chief executive officer three years ago. Now, she’s reversing her position.
After struggling to turn around the company since becoming CEO in 2011, Whitman is adopting a plan to split Hewlett- Packard’s PC and printer divisions off from its enterprise hardware and service groups. It’s a scenario she rejected as recently as last year, saying more time was needed to restore the company’s stature as the innovator that put Silicon Valley on the map.
“If you try to hive a division off, it’s really hard because you almost have to recreate the whole thing,” Whitman told Bloomberg News in 2011. Last year, Whitman defended her strategy for the company, saying it “will be one of the great comeback stories in American business.”
Even though she has rejected a split-up of Hewlett-Packard before, Whitman, 58, is no stranger to reinventions. Before running Hewlett-Packard, she pursued a career in politics and made an unsuccessful run at becoming California’s governor. Before that, she ran online marketplace EBay Inc. for a decade, following stints at Hasbro Inc., floral service FTD Cos., Stride Rite Corp. and Walt Disney Co.
“She may have to shift gears now, from having been a very prudent, careful CEO, to being a CEO who’s getting the ball moving,” said Erik Gordon, a University of Michigan business professor.
Hewlett-Packard said today that it plans to split into two separate companies, a personal-computer and printer business, and corporate hardware and services operations.
Whitman will lead Hewlett-Packard Enterprise, a business focused on corporate hardware and services, while Dion Weisler, the vice president in charge of Hewlett-Packard’s personal- computer and printer operations, will become CEO of that business.
Whitman has been introducing new products and today she expanded a job-cut program to more than 55,000 jobs to trim costs. Hewlett-Packard, based in Palo Alto, California, has fallen behind in mobile computing at a time when consumers have migrated to smartphones and tablets, and last year lost its place as the largest maker of PCs to Lenovo Group Ltd.
The split represents a reversal for Whitman, who ruled out a spinoff of the company’s PC division months after replacing Leo Apotheker, who had floated that possibility earlier that year. Whitman has since reiterated Hewlett-Packard’s commitment to the PC business on numerous occasions.
“The reason that we remain committed to the Personal Systems Group is no one understands computing better than HP,” she said at Morgan Stanley’s technology and media conference in February of last year.
Whitman has described the PC and printer groups as critical divisions for Hewlett-Packard, saying that they generate cash and offer compelling returns. Now, both are spun off into their own company, leaving Whitman with close oversight of Hewlett- Packard’s enterprise group, which will compete directly with International Business Machines Corp., Oracle Corp. and a slew of startups seeking to sell hardware, software and services.
Other technology companies have already embarked on massive restructurings. IBM sold its PC unit to Lenovo in 2005 and last week closed the sale of its low-end server unit to the Chinese company. Last month, EBay Inc. announced that it would spin off its PayPal unit.
Whitman has been putting out fires since she took over the helm at at Hewlett-Packard. The 2011 acquisition of U.K. software company Autonomy forced Hewlett-Packard to take an $8.8 billion writedown and mired the company in lawsuits that continue to this day.
“The kind of turmoil that HP has had at the top of the company can take a toll on companies, employees, shareholders,” Whitman said at the company’s Discover conference in Las Vegas in June 2012.