Mack Faculty Weigh in on the Hewlett-Packard Split

Hewlett-Packard CEO Meg Whitman
Hewlett-Packard CEO Meg Whitman

Following a decade of unprofitable acquisition decisions, Hewlett-Packard is trying a new tack—splitting the company in two. The split, set to take place within the next year, will be presided over by CEO Meg Whitman. The two new companies, HP Inc. and Hewlett-Packard Enterprises, will both look to renew M&A activities following the division process. Many observers view the split of Hewlett-Packard as the right move after a series of missteps that cost the company millions and destroyed shareholder value.

Where did the company go wrong? In an interview with BloombergBusinessWeek, Saikat Chaudhuri discussed the merits and malfunctions of HP’s deals in years past. When former CEO Carly Fiorina began her troubled tenure in 2001, her attempts to transform the company through PC acquisitions suffered from inability “to integrate the pieces together,” says Chaudhuri. He notes that the acquisitions themselves were not wrongheaded, but rather that the integration was the fundamental problem.

According to Chaudhuri, current CEO Whitman’s success will hinge on is to be having a targeted division to assist with “integrating the businesses Hewlett-Packard acquires so that the products fit together seamlessly.” Only time will tell, but Whitman will enjoy the benefit of a decade’s worth of hindsight in guiding her strategy going forward.