HP CEO Whitman: Turnaround Efforts Made Split Possible
The company is stronger now than it was three years ago, CEO Meg Whitman says, though analysts say challenges still abound.Hewlett-Packard, the tech giant that has seen its share of struggles over the past few years, with the contraction in the global PC market and the rapid changes in the data center driven by such trends as mobile computing and the cloud, will look significantly different a year from now. HP executives on Oct. 6 confirmed reports from over the weekend that the company will split in two by the end of its fiscal year 2015 next fall, with one company housing the PC and printer businesses and the other the enterprise solutions and services offerings. They also will have fewer employees. Along with reorganizing itself into two companies, CEO Meg Whitman and Cathie Lesjak, executive vice president and CFO, said during an early-morning conference call with investors, analysts and journalists that HP—which has over the past year announced as many as 50,000 job cuts—will slash another 5,000 positions. And Whitman could not guarantee that the latest round of layoffs would be the last. The announcement is fueling questions about the effectiveness of the five-year restructuring plan Whitman introduced in 2014, particularly in light of the company's announcement earlier this year that revenues for fiscal year 2015 would be relatively flat and the CEO's insistence over the past couple of years that—despite the ongoing drumbeat from some analysts that the company should shed its PC business—that HP worked better with its broad array of business under the same roof. HP was "better together," Whitman often said.
However, during the conference call and subsequent media interviews, she said that the timing on the split was right because of the success of the turnaround effort, pointing to the improved financial numbers, the growing innovation efforts and the new leadership at HP.