Technology giant, Hewlett-Packard is to separate its PC and printer arm from its software and corporate hardware business to adapt to the new era of mobile and online computing. HP investors will receive a tax-free distribution of shares in the new company.
The firm which is now in the fourth year of its five year turnaround plan announced the split as part of a drastic restructuring plan which has already resulted in tens of thousands of jobs lost in recent years.
Based upon last year’s revenue, both parts of HP would have ranked among the 50 largest US companies. Analysts are unsure how the split will help HP to compete against rivals, and whether the two divisions will ultimately end up competing against each other. HP has been under pressure from newer rivals such as Chinese firm, Lenovo, which overtook HP as the world’s largest PC maker in 2012.
The division of HP’s businesses follows the announcement of online auction site eBay’s split from payment system PayPal into a separate company, in part due to a belief that operations with different growth profiles are best managed as separate entities. Today, most businesses are facing more turbulent markets, demanding shareholders and discerning customers, leading them to plan restructuring to meet such challenges.
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