Hewlett Packard has decided that their company is better off splitting into two, “separating its personal-computer and printer businesses from its corporate hardware and services operations”. Overall this deal is quite interesting for a company whose stock has increased from $20 to $35 in the last year. According to another report, the company actually only gets 10% of its income from its PC’s illustrating that may be the reason for the split. Essentially, HP is attempting to become excellent at two things by splitting up the operations of the company and allowing each to focus solely on PC’s or hardware & services.
Obtained at: http://www.digitaltrends.com/wp-content/uploads/2013/05/HP-Pavilion-TouchSmart-11-Notebook-Left.jpg
In the bigger picture, HP’s revenue peaked in 2011 at $28.6 billion and has declined to its point in 2013 of $24.6 billion. This is a company needing a shakeup and its executives have agreed. This change should allow HP to not only improve the quality of their PC’s and printers, with more resources invested in them, but also bring down their costs so that they can increase the margins they are currently achieving. Investors should be happy with the decision to focus on 2 smaller pieces then 1 huge one, and give HP a boost in their stocks. Although I’m not an investment banker: This stock is bullish.