Boston, MA 10/06/2014 (wallstreetpr) – Hewlett-Packard Company (NYSE:HPQ)‘s shares rose more than 8% during pre-market session on Monday to $37.33, after the traders are on a look out for a news they had been waiting for long. The company has plants to split up its personal computer and printer business from that of corporate hardware and services operations. The move could come as an attempt by the company to rescue itself amid a diminishing revenue scenario.
Narrowed Focus
The Wall Street Journal said that the announcement is likely to come today, and the division of the two units could take place through tax-free distribution of shares to shareholders by next year. If the split-off goes ahead as planned, then it will lead to the formation of two individual publicly traded companies, each with over $50 billion of annual revenues. Hewlett-Packard Company (NYSE:HPQ) has long been witnessing diminishing sales in its PC and printer business and visualizes a substantial growth potential in corporate hardware and services segment. Thus, could break itself into two in order to manage the separate entities in the best possible way.
Deal-Making
The planned spin-off is already fuelling speculations of a possible future collaboration. It is to be noted that Hewlett-Packard Company (NYSE:HPQ) was in talks with EMC Corporation (NYSE:EMC), the data storage equipment maker, but it failed to settle into a final deal. Thus, the intended split off would enable the company to reenter into talks with EMC to create an industry giant of value more than $130 billion. The company had long been contemplating on dividing its units, but pressure from the shareholders prevented it from taking decisions. In any case, the decision appears prudent given the fact that Hewlett-Packard Company (NYSE:HPQ) lost its first spot to China’s Lenovo Group Ltd. last year, according to IDC. Further, the company reported a revenue of $55.9 billion from its Printing and Personal Systems Group for the fiscal year 2013, indicating a drop of 7.1%.
