Hewlett-Packard Plans to Break in Two

http://online.wsj.com/articles/hewlett-packard-plans-to-break-in-two-1412530028?mod=djemalertTECH

by dctoedt • 12 years ago

162 111 12 years ago

online.wsj.com

walterbell• 12 years ago

Which division gets the memristors?

CaveTech• 12 years ago

I'm going to go out on a limb and predict that they won't be going to the consumer PC and Printer side.

nandhp• 12 years ago

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://store.hp.com/webapp/wcs/stores/servlet/PDPStdView?cat... https://en.wikipedia.org/wiki/HP-12C

sudowhodoido2• 12 years ago

Horrible calculators despite a major following. I wouldn't buy too much into the HP calculator love.

I myself was a follower and had an HP 50G (Nice 205MHz ARM RPL machine, successor of the HP48 series). Was totally unusable without the manual which was in PDF format only so I'd have to sit at the computer anyway. I couldn't print it out because the three volumes were ~2000 pages. Plus the thing was so damn obtuse and totally non discoverable.

Then they released the Prime which is a buggy turd of a calculator wrapped in a very polished case.

Ended up with an old TI89 I paid £25 for on ebay that came with the manual which isn't a million pages long.

krupan3• 12 years ago

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.

fnordfnordfnord2• 12 years ago

I prefer my HP41 to anything they've made recently. The buttons are too hard to press on the new ones.

dannynemer• 12 years ago

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

Ricapar• 12 years ago

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

otterley• 12 years ago

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

lallysingh• 12 years ago

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

pkaye• 12 years ago

Compaq and Packard Bell.

Bud• 12 years ago

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

jonalmeida• 12 years ago

From HP to H&P.

danielweber• 12 years ago

When I saw the headline, I remembered making this joke ~10 years ago, and then I said, "wait, they're breaking up again?"

ben1040• 12 years ago

Same, but also hoping they'll call the corporate hardware/services company "DEC."

pera• 12 years ago

The return of Compaq and DEC? That would be lovely!

whyenot• 12 years ago

Sounds good. Then Agilent can change its name to HP and all will be right with the universe :)

Pxtl• 12 years ago

I actually liked when they had Compaq as their low-end brand and HP as their high-end. They should bring that back. It works for car companies. Right now HP sabotages their own brand name with their cheap low-end crap, even though they make some good devices.

I want to ser a win/android compete with apple properly - a well-defined and short list of mid-to-high skus and no cheap stuff to apologize for.

hackuser3• 12 years ago

I actually liked when they had Compaq as their low-end brand and HP as their high-end.

Maybe that only applied to consumer hardware? The used the Compaq name for their business hardware, including servers, for a long time IIRC.

shepard2• 12 years ago

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• 12 years ago

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.

jotm2• 12 years ago

HP is so far behind Samsung in the consumer market that it hurts thinking about it :-). They failed at smartphones and tablets, their computers are kwap, the printers are absolutely awful. Their strength is (was?) enterprise and business hardware from what I can tell.

shepard2• 12 years ago

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.

icambron• 12 years ago

Vertical integration makes good sense, but I don't think that's the situation HP is in. This is more of a horizontal split up. It does mean they can apply less collective pressure on component providers, but only to the extent that those business have overlapping needs. So one way to clarify the parent's point is that businesses should split up when they sell to different markets. I think the previous hesitation to take that step was the degree to which HP actually did have some (not hugely convincing) sales synergy between its server and printer businesses.

gergles• 12 years ago

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.

lstamour• 12 years ago

... or read it via Google: https://www.google.ca/search?q=online.wsj.com/articles/hewle...

judk2• 12 years ago

Sounds like they are discharging Compaq.

pinaceae• 12 years ago

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• 12 years ago

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.

maxerickson• 12 years ago

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

tonyplee2• 12 years ago

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.

joezydeco2• 12 years ago

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....

HeyLaughingBoy• 12 years ago

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

tonyplee2• 12 years ago

Seems to make sense to separate the life science side from "normal" agilent side of biz. Life science have completely different set of customers, market need, etc. Also the time for life science, diagnostic type ROI is probably different than the normal scope/logic analyzer type ROI.

reportingsjr• 12 years ago

The announcement was actually a year ago. The officially split off the company on September 1st I believe. Really annoyed a lot of EEs that they are splitting it off yet again.

crapshoot101• 12 years ago

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.

radmuzom• 12 years ago

Well, they are the 3rd largest in revenue in the IT / Software services segment after IBM and Fujitsu.

SiVal• 12 years ago

Good point, and how often are the blogs and podcasts overflowing with news about IBM and Fujitsu? I discovered long ago that there is a huge difference between generating news and generating the things companies are created to generate (money, products, services, employment, research, etc.) One consequence of this difference is that our unconscious estimates of the comparative scale of what is going on at various companies is wildly distorted by news coverage.

jeffreyrogers2• 12 years ago

If you get out of the VC/Silicon Valley/Tech universe these companies are appreciated much more. In the wider business world, they still get a lot of attention, largely because they are good businesses despite not having the sex appeal that smaller, but quickly growing companies might have.

porsupah2• 12 years ago

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• 12 years ago

Well, they were boasting about it just this summer

http://arstechnica.com/information-technology/2014/06/hp-lab...

randomafrican• 12 years ago

Small margins and low growth though.

And many would argue that it'd be hard to do better.

ricardobeat• 12 years ago

Paywall.

cpncrunch• 12 years ago

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.

a3n• 12 years ago

https://news.google.com/news/search?q=site%3Awsj.com%20%22He...

ghshephard2• 12 years ago

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.

italophil• 12 years ago

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?

adventured2• 12 years ago

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).

q22• 12 years ago

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...

wittekm• 12 years ago

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• 12 years ago

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.

Tomte• 12 years ago

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."

knackernews• 12 years ago

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

krupan3• 12 years ago

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.

ScottBurson• 12 years ago

You're serious? Mark Hurd is a bean counter, not a technologist. Meg is not perfect, but she's vastly better than Hurd.

(HP employee)

adventured2• 12 years ago

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)

kqland2• 12 years ago

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.

bitwize• 12 years ago

An example from earlier in HP's history:

When Carly Fiorina was ousted from the company she wrote a book all about how she was despised at HP for being a woman in charge of a major engineering firm. But being a woman had nothing to do with it; being an idiot who didn't understand engineering culture and who damn well nearly broke the company had everything to do with it. Steve Ballmer was ousted from Microsoft for similar reasons.

hackuser3• 12 years ago

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.

jil141• 12 years ago

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.

hungarian-eel• 12 years ago

Calculator division, and lab instruments divison?

fnordfnordfnord2• 12 years ago

Long abandoned, and already spun off (Agilent).

teddyh• 12 years ago

See A Short History of HP:

http://www.icanbarelydraw.com/comic/365

jgalt212• 12 years ago

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

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...

jeffreyrogers2• 12 years ago

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• 12 years ago

Yeah, they know: http://www.zdnet.com/john-chambers-predicts-brutal-consolida...

tenpoundhammer• 12 years ago

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.

pjmlp• 12 years ago

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.

vram222• 12 years ago

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.

raspasov• 12 years ago

They should break off HP Labs and make this real faster :) http://arstechnica.com/information-technology/2014/06/hp-lab...

namityadav• 12 years ago

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• 12 years ago

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• 12 years ago

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.

KobaQ• 12 years ago

Diligent, thoughtful journalism doesn't happen for free

A free to use website (with ads) doesn't mean the journalists aren't payed. Most of the time, they are.

Generally, there's nothing wrong with payed websites, but it makes it a bit frustrating for people at a discussion board for web articles. Especially when there are users who really can't afford them (from countries with less income than North America or Europe) and the same information is available on free to use websites.

ghshephard2• 12 years ago

WSJ is an exception - you can always google the title to get a free copy. Also - they broke the news a good 2+ hours before any other sites - so they were the only source.

robomartin• 12 years ago

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.

krylon2• 12 years ago

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?

Hewlett-Packard Plans to Break in Two

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