Practical analysis for investment professionals
09 October 2014

Poll: Will the Hewlett-Packard Breakup Create Shareholder Value?

Hewlett-Packard (HPQ) recently announced that it would split itself into two publicly traded entities, one focused on the enterprise market and the other on the PC and printer market. The company abandoned a similar plan in 2011, with then-incoming CEO Meg Whitman insisting that the company was “better together.” What’s changed? Industry dynamics, according to HPQ.

The benefits of diversification and the appeal of cost savings from supply chain synergies have yielded to the need for “focus” and a desire to be “nimble.” A less charitable view would be that the company, currently in the third year of a five-year turnaround plan, is resorting to financial engineering to appease a restless shareholder base.

We asked CFA Institute NewsBrief readers whether they thought the planned breakup of HPQ would create value for shareholders in five years: 48% answered in the affirmative, 30% were skeptical, and 22% were undecided.

Will the planned breakup of Hewlett-Packard into two publicly traded entities — one focused on the enterprise market and the other on the PC and printer market — create value for its shareholders in five years?

Poll: Will the Hewlett-Packard Break-Up Create Shareholder Value?


Time will tell whether the company’s shareholders will be rewarded for the planned breakup. As for the bankers now dismantling the deals they peddled to HPQ a decade ago, they have no such worries.

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Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.


About the Author(s)
David Larrabee, CFA

David Larrabee, CFA, was director of member and corporate products at CFA Institute and served as the subject matter expert in portfolio management and equity investments. Previously, he spent two decades in the asset management industry as a portfolio manager and analyst. He holds a BA in economics from Colgate University and an MBA in finance from Fordham University. Topical Expertise: Equity Investments · Portfolio Management

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