Hewlett-Packard is splitting itself into two separate businesses, the company confirmed on Monday.HP is splitting its personal-computer and printer segments from its corporate hardware and services business. The PC/printer company will be called HP. The remaining units will be called Hewlett-Packard Enterprise. Both will be public companies. The stock split is intended to be a tax-free transaction for existing shareholders. The Wall Street Journal first reported the story. The company reorganized itself in 2012 under CEO Meg Whitman. That move combined its computer and printer businesses. The PC and computer segment is massive for HP. It accounts for half of the company's revenue. For the first six months this year, it reported $27.8 billion in revenue. That's about three times the size of HP's next biggest unit, the Enterprise Group, which makes servers, storage, and network hardware. Under the new split, Whitman is chairman of the computer and printer business, and she remains CEO of the separate HP Enterprise company. Patricia Russo, who sits on HP's board, is chairman of the enterprise company. Dion Weisler, who currently leads the printer and PC operation, is being named CEO of the new printer/PC company. Whitman has said since 2012 that fixing the supply chain is one of HP's biggest priorities to get the company back on track in terms of revenues and profits. HP reported a beat on revenue for its third quarter, and its profits were right in line. This isn't the first time HP has been toying with the idea of strategic moves. For almost a year it has contemplated merging with EMC to create what would be one of the biggest enterprise companies in the world. But talks apparently fell through, The Journal reported. And HP isn't the only company that sees benefit in splitting itself to create a more-focused company. eBay announced last week that it was spinning off PayPal into a separate business starting next year. Here is the press release HP issued Monday morning: October 06, 2014 06:30 ET HP to Separate Into Two New Industry-Leading Public Companies Hewlett-Packard Enterprise Will Define the Next Generation of Technology Infrastructure, Software and Services for the New Style of IT HP Inc. Will Be the Leading Personal Systems and Printing Company Delivering Innovations That Will Empower People to Create, Interact and Inspire Like Never Before Strategic Step Provides Each New Company With the Focus, Financial Resources and Flexibility to Adapt Quickly to Market and Customer Dynamics While Generating Long-Term Value for Shareholders PALO ALTO, CA--(Marketwired - Oct 6, 2014) - HP (NYSE: HPQ) Highlights: Hewlett-Packard Enterprise will build upon HP's leading position in servers, storage, networking, converged systems, services and software as well as its OpenStack Helion cloud platform Meg Whitman to be President and Chief Executive Officer of Hewlett-Packard Enterprise; Pat Russo to be Chairman of Hewlett-Packard Enterprise Board HP Inc. will be the leading personal systems and printing company with a strong roadmap into the most exciting new technologies like 3D printing and new computing experiences Dion Weisler to be President and Chief Executive Officer of HP Inc.; Meg Whitman to be Chairman of the HP Inc. Board Company reiterates fiscal 2014 non-GAAP diluted net earnings per share (EPS) outlook of $3.70 to $3.74 and updates GAAP diluted net EPS outlook to $2.60 to $2.64 Company issues fiscal 2015 non-GAAP diluted net EPS outlook of $3.83 to $4.03 and GAAP diluted net EPS outlook of $3.23 to $3.43 HP (NYSE: HPQ) today announced plans to separate into two new publicly traded Fortune 50 companies: one comprising HP's market-leading enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise, and one that will comprise HP's market-leading personal systems and printing businesses, which will do business as HP Inc. and retain the current logo. Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc. The transaction is intended to be tax-free to HP's shareholders for federal income tax purposes. Today's announcement comes as HP approaches the fourth year of its five-year turnaround plan. Over this time, the company has executed successfully against its turnaround objectives, keeping customers and partners at the forefront. HP has reignited its innovation pipeline, strengthened its go-to-market capabilities, rebuilt its balance sheet, and inspired its workforce and management teams. The company is now positioned to accelerate performance, drive sustained growth and demonstrate clear industry leadership in key areas. "Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market," said Meg Whitman, Chairman, President and Chief Executive Officer of HP. "The decision to separate into two market-leading companies underscores our commitment to the turnaround plan. It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders. In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders." Both companies will be well capitalized and expect to have investment grade credit ratings and capital structures optimized to reflect their distinct growth opportunities and cash flow profiles. The separation into independent publicly traded companies will provide each company with its own, more focused equity currency, and investors with the opportunity to invest in two companies with compelling and unique financial profiles well suited to their respective businesses. Management Structure Meg Whitman, President and Chief Executive Officer of HP, and Cathie Lesjak, Chief Financial Officer of HP, will hold these positions with Hewlett-Packard Enterprise. When the separation is complete, Whitman will also serve on the Board of Directors of Hewlett-Packard Enterprise, and Pat Russo will move from Lead Independent Director of HP to Chairman of Hewlett-Packard Enterprise. Dion Weisler, Executive Vice President of HP's Printing and Personal Systems business, will lead HP Inc. as President and Chief Executive Officer. Whitman will serve as non-executive Chairman of HP Inc.'s Board of Directors. Hewlett-Packard Enterprise Hewlett-Packard Enterprise will have a unique portfolio and strong multi-year innovation roadmap across technology infrastructure, software and services to allow customers to take full advantage of the opportunities presented by cloud, big data, security and mobility in the New Style of IT. By leveraging its HP Financial Services capability, the company will be well positioned to create unique technology deployment models for customers and partners based on their specific business needs. Additionally, the company intends for HP Financial Services to continue to provide financing and business model innovation for customers and partners of HP Inc. Customers will have the same unmatched choice of how to deploy and consume technology, and with a simpler, more nimble partner. The separation will provide additional resources, and a reduction of debt at the operating company level, to support investments across key areas of the portfolio. The separation will also allow for greater flexibility in completing the turnaround of Enterprise Services and strengthening the company's go-to-market capabilities. "Over the past three years, we have reignited our innovation engine with breakthrough offerings for the enterprise like Apollo, Gen 9 and Moonshot servers, our 3PAR storage platform, our HP OneView management platform, our HP Helion Cloud and a host of software and services offerings in security, analytics and application transformation," continued Whitman. "Hewlett-Packard Enterprise will accelerate innovation across key next-generation areas of the portfolio." HP Inc. HP Inc. will be a proven leader in the personal systems and printing markets with exciting new technologies on the horizon. The new company's strong profitability and free cash flow will enable investments in growth markets such as 3-D printing and new computing experiences. At the same time, HP Inc. will continue to execute against a well-defined and established strategic plan, ensuring continuity for customers and consistent value to shareholders. "Since assuming responsibility for the Printing and Personal Systems Group, Dion and his leadership team have done an excellent job of building our relationships with customers and channel partners, segmenting the market and driving product innovation," added Whitman. "The creation of HP Inc. will only accelerate the progress the team has made." "This is a defining moment in our industry as customers are looking for innovation to enable workforces that are more mobile, connected and productive while at the same time allowing a seamless experience across work and play," said Weisler. "As the market leader in printing and personal systems, an independent HP Inc. will be extremely well positioned to deliver that innovation across our traditional markets as well as extend our leadership into new markets like 3-D printing and new computing experiences -- inventing technology that empowers people to create, interact and inspire like never before." Transaction Details The separation transaction is intended to be tax-free to HP shareholders for federal income tax purposes. The transaction is currently targeted to be completed by the end of fiscal 2015, subject to certain conditions, including, among others, obtaining final approval from the HP Board of Directors, receipt of a favorable opinion and/or rulings with respect to the tax-free nature of the transaction for federal income tax purposes and the effectiveness of a Form 10 filing with the Securities and Exchange Commission. Goldman Sachs & Co. is serving as financial advisor and Wachtell, Lipton, Rosen and Katz is serving as legal advisor to HP. For more information, please see here. Financial Outlook For fiscal 2014, HP reaffirms its non-GAAP diluted net EPS outlook range of $3.70 to $3.74, and updates its fiscal 2014 GAAP diluted net EPS outlook to be in the range of $2.60 to $2.64. For fiscal 2015, HP estimates non-GAAP diluted net EPS outlook to be in the range of $3.83 to $4.03 and GAAP diluted net EPS outlook to be in the range of $3.23 to $3.43. HP's outlook does not include one-time GAAP charges the company is expected to incur in connection with the separation, including advisory and tax costs which will be quantified at a later date. Investment Community Conference Call For webcast details, go to www.hp.com/investor/2014OctAnnouncement/. HP Securities Analyst Meeting 2014 HP also announced today that, as a result of the announcement of this separation, its October 8, 2014 Securities Analyst Meeting has been postponed. About HP HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. With the broadest technology portfolio spanning printing, personal systems, software, services and IT infrastructure, HP delivers solutions for customers' most complex challenges in every region of the world. More information about HP is available at http://www.hp.com. Use of non-GAAP financial information To supplement HP's historical and forecasted financial results presented on a GAAP basis, HP provides non-GAAP diluted net earnings per share. Non-GAAP diluted net earnings per share is defined to exclude the effects of any restructuring charges, charges relating to the amortization of intangible assets and certain other acquisition-related charges recorded or expected to be recorded during the relevant period. In addition, non-GAAP diluted net earnings per share are adjusted by the amount of additional taxes or tax benefit associated with each non-GAAP item. Fiscal 2014 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.10 per share, related primarily to restructuring charges and amortization of intangible assets. Fiscal 2015 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.60 per share, related primarily to amortization of intangible assets and restructuring charges. HP's management uses non-GAAP financial measures, including HP's non-GAAP diluted net earnings per share, to evaluate and forecast HP's performance before gains, losses or other charges that are considered by HP's management to be outside of HP's core business segment operating results. These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of HP's results as reported under GAAP. For example, items such as the amortization of intangible assets, though not directly affecting HP's cash position, represent the loss in value of intangible assets over time. The expense associated with this loss in value is not included in HP's non-GAAP diluted net earnings per share and therefore does not reflect the full economic effect of the loss in value of those intangible assets. In addition, items such as restructuring charges that are excluded from HP's non-GAAP diluted net earnings per share can have a material impact on HP's GAAP diluted net earnings per share. Other companies may calculate non-GAAP diluted net earnings per share differently than HP does, which limits the usefulness of that measure for comparative purposes.