Hewlett-Packard Separating into Two Companies
Friday 10th October 2014
In a move that many might deem shocking, Hewlett-Packard – the IT company that is more commonly known as HP – is splitting itself down the middle and turning itself into two companies. Early market response appears positive, and many commentators are suggesting that this might be the best option on the table for the tech giant at the present moment.
The Impact of HP
Whether you’re an investor or a tech enthusiast (or both), it’s almost impossible that you won’t have heard of Hewlett-Packard. The first of many technology companies to set up shop in the Bay Area of San Francisco, HP is a company that came – just like Microsoft and Apple – from extremely humble beginnings, and went on to have fingers in pretty much all available pies, as far as technology is concerned.
Time to Split
Although HP has by no means been struggling over all over the past couple of years, if the company is able to restructure itself so that its personal computing and printing divisions are merged, and its corporate IT and business solutions departments are also merged, the two separate companies would be worth $50 billion. This is precisely the line of thinking that has driven HP to consider the split, and many people that it is the best course of action for the company.
Opinion Is Positive
Generally, when companies decide to split themselves in half, there is a general move towards chaos in the market, but with HP’s announcement to do just that, commentators appear to have reached a consensus, and that consensus seems to be positive. For example, Brian White at Cantor Fitzgerald summarises the popular opinion thusly:
“Given the challenges in managing a company the size of HP, the negative, long-term secular trends in the PC market that discourage investor attention, and the need for HP to focus more on the cloud (e.g., as Oracle did last week), we believe a separation into two companies makes sense, as we have suggested for quite some time.”
Investing in Technology
So if you’re investing in technology and you’ve been weighing up the options recently, now could be the time to put a break on your buying until HP splits. When the company does restructure itself, you’ll need to act fast, so a responsive, smart trading platform like one offered by Sucden Financial should be the primary tool in your investor’s toolkit.
Ultimately, HP’s decision to split into two companies seems like a smart move from a company that has been around the block a number of times.
Editorial Contact Details - Conor Shilling