As Fiorina Runs For President On Her Record, A Broken HP Undoes Her Biggest Gambit

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It would be unfair and inaccurate to blame all of Hewlett Packard’s(HPQ) problems on Carly Fiorina. After all, her successor as chairwoman, Patty Dunn resigned after presiding over illegal spying on Board members and journalists.  Mark Hurd, CEO at that time, later resigned amidst allegations of improper payments to a contractor with whom he had a personal relationship. Hurd had, however, more than doubled the market value of HP during his tenure. After a short reign of an interim CEO, Leo Apotheker was hired as Hurd’s replacement.  Apotheker’s disastrous tenure lasted less than a year, but did not end before he was able to complete the $11.7 billion purchase of Autonomy, which has since been written down completely amidst allegations of accounting fraud.

Perhaps, not all of HP’s problems are Fiorina’s fault, but the spinoff being completed next week by current HP CEO Meg Whitman reverses the signature move of Fiorina’s Hewlett Packard tenure. Fiorina was bloodied by a brutal battle to purchase Compaq. She argued that it would transform the company and enhance its ability to compete. Now, the company is, at long last, separating its Enterprise business from the consumer business largely acquired in the Compaq deal.

On November 1, HP shareholders as of October 21 will receive one share of Hewlett Packard Enterprise(HPE)  for each HP share owned.

Hewlett Packard Enterprise Company (“Hewlett Packard Enterprise”), will provide the cutting-edge technology solutions enterprises need to optimize their traditional IT while helping them build a secure, cloud-enabled, mobile-ready future. Specifically, this company will include HP’s best-in-class portfolio across its Enterprise Group, Enterprise Services, Software and Financial Services businesses.

HP Inc. will own and operate HP’s market leading printing and personal systems businesses.  HP Inc. will have an impressive portfolio and a strong innovation pipeline across areas such as multi-function printing, Ink in the Office, graphics, commercial mobility, and services.

“This separation will enable us to accelerate the turnaround we began four years ago,” said Meg Whitman, Chairman, President and Chief Executive Officer, HP. “As two independent, industry-leading companies, Hewlett Packard Enterprise and HP Inc. can drive more focused business strategies, innovation roadmaps, and go-to-market models.  The separation will also present better choices for investors by creating two distinct and attractive investment profiles.”

The separation will occur by means of a pro rata distribution to HP stockholders of 100% of the outstanding shares of Hewlett Packard Enterprise.  The distribution is expected to occur on November 1, 2015.  In connection with the separation, HP will be renamed HP Inc.  Consequently, the separation will provide HP stockholders with ownership interests in both HP Inc. and Hewlett Packard Enterprise.

The transaction is expected to be tax free for shareholders.  The company’s full information statement on the transaction filed with the SEC can be found here.

Disclosure: The author holds no position in any stock mentioned