Hewlett-Packard is splitting in two

HP will be splitting into two entities, the Hewlett-Packard Enterprise unit and the Hewlett-Packard Inc. hardware unit. The split will take place soon and will see both companies traded separately on Wall Street.  The Enterprise unit will focus on enterprise-level hardware and software as well as IT-related sourcing while the hardware unit will focus on computers and printers for consumer use.

HP Enterprise will be lead by current CEO Meg Whitman while Pat Russo will be chairman of the board. the PC/printer company will be run by Dion Weisler with Whitman as non-executive chairman.

The two will have roughly equal revenues at about $58 billion each with operating profits in the $6B range. The Enterprise unit has slightly higher valuation and operating margins, but the two are basically equal in most regards. HP Enterprise will focus largely on Enterprise Group and Enterprise Services while HP Inc will focus on personal computers and printing.

The separation will be tax-free to shareholders as valuations will remain unchanged.

Analysts are split on whether the breakup is due to weakness or because of managerial argumentation in the back room. Several recent attempts at acquisition that fell through when HP failed to continue negotiations could indicate internal strife that may be remedied with this split.

Whatever the reasoning, the split is probably good for the company over all and many agree that it’s been a long time coming.

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