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Journalism of Courage
PALO ALTO, MARCH 3: US technology giant Hewlett-Packard, one of Silicon Valley8217;s flagship enterprises, on Tuesday announced plans to split into two separate companies.
The move will split the 47.1 billion group8217;s instruments and medical operations from the high-profile computer products group. quot;We are taking this action to sharpen the strategic focus of our businesses, improve their agility and increase their responsiveness to customers and partners,quot; HP chairman Lewis Platt said in a statement from company headquarters here.
quot;These new companies will be financially strong and independently managed, each with its own board of directors and its own central research-and-development organisation8230; This realignment positions each newcompany to deliver enhanced growth in revenue and earnings.quot;
While HP8217;s first quarter net earnings this year increased 3 per cent and earnings per share beat market expectations by 10 cents, revenue growth was virtually unchanged at 11.93 billion. In addition, according to the Wall Street Journal, HP8217;s personal computer business has posted low profits in response to falling prices. Its large computers, known as servers, are also reported to have lost market share to rivals such as Sun Microsystems and IBM.
Hewlett-Packard said it did not expect any significant overall reductions in its 123,000-strong workforce as a result of the realignment. quot;This announcement is not about major short-term cost reductions,quot; according to Robert Wayman, company executive vice president.
quot;Where we need to realign our work force to support the new companies, we will manage this, as we have in the past, through our traditional approaches, such as redeployment, flex-force adjustments and attrition.quot;
The new measurementcompany will comprise Hewlett-Packard8217;s test-and-measurement, components, chemical analysis and medical businesses, which in fiscal 1998 accounted for 7.6 billion of the company8217;s revenues of 47.1 billion.
Hewlett-Packard is considering a public offering for about 15 per cent of the measurement company8217;s outstanding shares by the end of the year. The new computing and imaging company would continue to operate under the Hewlett-Packard name and would group all of its enterprise and personal computing, software and services and printer businesses. quot;The first chapter of the Internet was about access to information and self-service transactions,quot; said Platt.
quot;In the second chapter, modular electronic services will proliferate. HP will provide the fundamental innovations and solutions that will make it easier for companies to build and deploy e-services, including enabling technologies that allow these services to interact with and leverage each other. quot;One of my top priorities is to drive the implementationof this strategy.quot;
Indian arm also to be split
NEW DELHI: Hewlett-Packard India will be split into two companies as part of the strategic realignment effort at its parent company.
According to HP India president Ganesh Ayyar, the Indian subsidiary will be aligned on the pattern of the parent company, with one part focusing on computing and imaging segments while the other targeting the testing and measurement market. Ayyar said the need to factor in the impact of Internet on business was one of the reasons for going for such a strategic realignment. quot;It would also help us to be more focused.quot;
Ayyar, however, stressed that the nitty-gritty of the Indian companies have not been worked out and will be done so within the next 12 months.
He also allayed fears that the restructuring would lead to reduction in work force.
The restructuring will help HP India to focus on the computing market where it is one of the market leaders, Ayyar said. In the testing and measurement segment, HP is a marketleader and will continue to be so, said HP India director medical products group Anjan Bose.
Declining to give revenue break-up for measurement and computing markets, Ayyar said it be on line of the company8217;s international performance where 82 per cent of revenue comes from computing and imaging segment while measurement and testing equipment contribute 18 per cent.
