Presented By:Naresh SharmaMBA – 1 year ,I-Sem.

Presented To:Mrs. Garima Jain

Split of hp (Hewlett-Packard)

INTRODUCTIONHewlett-Packard     

HP incorporated on August 18, 1947 and went public on November 6, 1957.

The Hewlett-Packard Company (commonly referred to as HP) was an American global information technology company headquartered in Palo Alto, California.

It developed and provided a wide variety of hardware components as well as software and related services to consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors.

Bill Hewlett and Dave Packard  graduated with degrees in  electrical engineering from Stanford University in 1935.

In 1939, Packard and Hewlett established Hewlett-Packard (HP) in Packard's garage with an initial capital investment of US$538.

Hewlett-Packard (HP) officially announced their plan to split into two entities on November 1, 2015 . 

The first will include the company’s enterprise services, software, and servers known as  Hewlett-Packard Enterprise while the other one will focus on its PC and printing businesses and will be known as HP Inc.

REASON BEHIND THE SPLIT OF HP

Adoption of this new structure might be HP’s move to remain competitive in the business and regain its position in the PC world.

The most recent financial statement suggests that its $42.6 billion PC and printer business saw a 3.1% sales increase during the nine months but fell behind Lenovo in the PC industry.

The break-up will be a tax-free distribution of shares to shareholders.

A number of big companies, including eBay Inc. have chosen to split up lately,  because of a belief that operations with different growth profiles are best managed as separate entities.

HP seems to follow the same belief in order to cover the sales decline it incurred recently.

REASON BEHIND THE SPLIT OF HP (continue)

Approved by the tech giant’s Board of Directors, Hewlett Packard Enterprise will provide technology solutions designed to help businesses optimise traditional IT while also assisting in cloud and mobile transitions.

WORKING AREAS

Specifically, this company will include HP's portfolio across its Enterprise Group, Enterprise Services, Software and Financial Services businesses.

On the other hand, HP Inc. will own and operate HP's printing and personal systems businesses, across areas such as multi-function printing, Ink in the Office, graphics, commercial mobility, and services.

WORKING AREAS (continue)

1. Focus :-

It's not clear that HP in its current state can focus on all the required areas needed to win.

HP has been late to the 3D printing party and its PC unit lost the No. 1 market share spot to Lenovo. In contrast, the enterprise unit has some promising efforts.

HP's Moon shot servers are interesting and the company has put together some big data products and software that are growing quickly. But that far-from-complete list of HP moving parts illustrates the company's problem: There isn't enough focus on any one area to really dominate.

Here's why an HP split makes sense:

2.Research and development spending:-   Whitman is reversing HP's R&D investment slide

 . But HP as currently constitute has a printer and PC division fighting for innovation spending with the enterprise side of the house. That's a lot of hands in an R&D pie that equates to about 3 percent of revenue.

3. Option To Go Private:- One unit has the option to go private. HP's printing unit is a total cash cow that has all the makings of a private company. As one mammoth company, it would be almost impossible for HP to go private. Now each side of the company can realistically weigh its options. Going private, which is certainly popular with the likes of Dell, Tibco and BMC Software all ducking out of the public markets, can lead to more strategic long-term moves.

HP needs more software and cloud. The weakest part of HP is its software unit, which should be a larger part of sales. The issue for HP is that the software unit needs massive numbers to really move the revenue needle overall. As part of a smaller enterprise unit, HP Enterprise could plot a merger with an enterprise juggernaut like Red Hat or pick up SaaS companies. 

4. HP Enterprise could plot a merger :-

HP Enterprise is easier to swallow for a larger player. HP has reportedly had talks with EMC, but the price tag and business structure complicated a deal. What would EMC want with a PC business? Printers? Should HP ditch the PC and printing unit and EMC-HP Enterprise deal looks much more interesting.

5. HP Enterprise is easier to swallow :-

THANK YOU !

ANYQUERY?