Jeremy Steinberg
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Hewlett-Packard’s Split Was Three Years in the Making

Hewlett-Packard Co. (HPQ) unveiled plans to separate itself into two companies, one with its personal-computer and printer businesses and another focusing on corporate hardware and services. It’s an idea that former Chief Executive Officer Leo Apotheker floated three years ago, before he was ousted after less than 11 months at the helm.

CEO Meg Whitman, who took over from Apotheker in September 2011, killed the possibility of spinning off PCs soon after arriving as she embarked on a five-year plan to revive the company.

The influence of the Palo Alto, California-based company, founded by William Hewlett and David Packard in a garage in 1939, has declined as the world has become more mobile. The split of Hewlett-Packard’s PC and printing divisions from its enterprise business comes at a time when other technology companies are also breaking up to narrow their focus and respond more quickly to industry changes.

The following is a timeline of Hewlett-Packard’s evolution since Apotheker first unveiled the idea of spinning off the company’s PC business.

Sept. 30, 2010: Apotheker, former CEO of German software maker SAP AG, is named president and CEO of Hewlett-Packard, succeeding Mark Hurd, who resigned on Aug. 6, 2010. At the time, analysts said Apotheker’s software experience could benefit Hewlett-Packard as the company sought to expand in that higher-margin business.

Feb. 9, 2011: Hewlett-Packard unveils the TouchPad tablet computer, which runs the WebOS software it acquired in its purchase of Palm Inc. in 2010 for $1.2 billion.

March 2011: Apotheker says every PC shipped by Hewlett-Packard will have the ability to run WebOS software. He also says he plans to use acquisitions to expand in software and will reverse Hurd’s emphasis on cost-cutting. “HP has lost its soul,” he says.

March 14, 2011: Apotheker raises Hewlett-Packard’s dividend for the first time since 1998. The company also announces plans to introduce a cloud-computing service.

July 12, 2011: Apotheker reorganizes the PC unit as part of a push to broaden use of WebOS. Jon Rubinstein, Palm’s former CEO, is put in charge of product development for PCs, tablets and smartphones. Senior Vice President Stephen DeWitt is named to lead a new unit devoted to expanding use of WebOS.

Aug. 18, 2011: Hewlett-Packard agrees to acquire U.K.-based software maker Autonomy Corp. for $10.3 billion, a purchase aimed at making HP a leader in information management, and says it is considering a spinoff of its PC unit. The company also discontinues products running WebOS. Apotheker trims the fiscal 2011 sales forecast for a third time.

Sept. 22, 2011: HP ousts Apotheker, and names director and former EBay Inc. CEO Meg Whitman as replacement. Chairman Ray Lane becomes executive chairman. The company says it will continue to explore whether to sell or spin off the PC business, and Whitman says she is “firmly committed” to the plan to acquire Autonomy.

Oct. 27, 2011: Whitman scraps Apotheker’s proposal of spinning off the company’s PC division. At the time, the company said its evaluation found that being the world’s largest PC seller was too valuable to Hewlett-Packard’s brand, procurement power and customer relationships.

“If you try to hive a division off, it’s really hard because you almost have to re-create the whole thing,” Whitman told Bloomberg News.

May 23, 2012: Hewlett-Packard says it will cut its workforce by 27,000 jobs as it streamlines to cope with slower demand for printers and stagnant PC sales.

Oct. 10, 2012: Hewlett-Packard loses its place as the largest maker of PCs to Lenovo Group Ltd. in the third quarter of 2012, according to market-research firm Gartner Inc., ending a six-year reign as No. 1. The companies went on to trade the top spot for several quarters afterward, while Lenovo tookthe lead on an annual basis in 2013, according to Gartner.

Nov. 20, 2012: The company says it recorded an impairment charge of $8.8 billion related to “accounting improprieties” at Autonomy -- a development that has mired the company in lawsuits ever since.

January 2013: Whitman says it will take five years to turn around the company.

“Five years,” she says in an interview. “Some people don’t like that answer.”

Feb. 26, 2013: Whitman says the company is committed to its personal-computer division.

“The reason that we remain committed to the Personal Systems Group is no one understands computing better than HP,” she says at a Morgan Stanley conference. “But we’ve got real work to do.”

April 2013: Whitman unveils Hewlett-Packard’s Moonshot line of servers to appeal to social-media, cloud-computing and e-commerce websites and tap into the $51.3 billion global market for servers, where Hewlett-Packard is second to International Business Machines Corp. in revenue.

April 4, 2013: Ray Lane departs as Hewlett-Packard chairman, underscoring shareholders’ dissatisfaction with the company’s performance and the Autonomy purchase.

Nov. 26, 2013: The company reports a second annual sales decline as the PC market contracts.

May 22, 2014: Hewlett-Packard announces plans to expand its job cuts to as many as 50,000 in an effort to reduce costs and revamp the company as annual PC sales head for a third year of declines.

July 17, 2014: Whitman becomes Hewlett-Packard’s chairman after activist investor Ralph Whitworth resigns to address health issues.

Sept. 11, 2014: Hewlett-Packard agrees to buy cloud-computing software developer Eucalyptus Systems Inc. as Whitman embarks on new acquisitions to bolster the computer maker’s businesses.

Sept. 22, 2014: People with knowledge of the matter say storage-computer maker has EMC Corp. contacted Hewlett-Packard about selling itself, though disagreements arose over a takeover price and management. A person familiar with the talks has said the idea to spin off Hewlett-Packard’s printers and PCs businesses came up in those merger discussions with EMC.

Oct. 6: Hewlett-Packard announces the split. Whitman will become chairman of HP Inc., the PC and printing business, and CEO of Hewlett-Packard Enterprise after the breakup.

“Up until recently, we were not strong enough from a balance sheet perspective, from a leadership perspective,” Whitman said today in an interview. “The businesses were not strong enough, and now they are.”

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