UPDATED 06:34 EDT / JULY 03 2015

NEWS

HP Enterprise split edges closer with SEC filing

Hewlett-Packard Company has filed Form 10 with the U.S. Securities and Exchange Commission (SEC) as part of the process of registering HP Enterprise Inc. as a seperate, independent firm. It’s an important step as the company prepares to split itself into two entities.

The 311 page document gives us a good look at the finances of the various businesses that will eventually form HP Enterprise. The new business made profits of $1.6 billion in the last year on revenues of $55.1 billion, down from a $2.1 billion profit on $57.4 billion revenues in 2013.

HP Enterprise is required to make the filing because it’s the official “spin-off” company. HP Inc. is essentially just HP Company being renamed, so it doesn’t need to file anything, though profit and revenue-wise it’s expected to be about the same size as the new company.

Once the split takes place on November 1, HP Enterprise will sell enterprise services, servers, storage and networking gear, while HP Inc. will retain the PC and Printer businesses.

There are still many unanswered questions about the split though, such as how many HP Enterprise shares will be given to each current HP shareholder, and exactly which subsidiaries will go to which company. We also don’t know who’s going to sit on HP Enterprise’s board.

However the filing did give us some insights, including a promise between the two new firms that they won’t try to poach staff from the other. Both firms are excluded from hiring each other’s former staff for a minimum period of six months after they’ve left. There’s an exception to that rule if an employee is terminated by one company and the other wants to hire them, though.

The two firms have also agreed not to compete with each other for at least three years after splitting, and they have also said they will partner to buy supplies, jointly sell some products to customers, and they will share all patents and intellectual property.

As for HP’s executives, they’ll continue to receive their salaries more or less as is, with golden parachutes attached. CEO Meg Whitman received $19.6 million last year, most of which was paid in stock, though she received $1.5 million in cash as well as a $4.3 million cash bonus.

We also learned from the filing that Patricia Russo will become the first chairwoman of HP Enterprise. Russo was previously CEO of Alcatel-Lucent S.A. from 2006 to 2008, and joined HP in 2011 at about the same time as Whitman joined the company. Whitman will become CEO of HP Enterprise, and also be the first chairwoman at HP Inc.

At the time HP first announced the split, executives said the breakup will allow each company to reinvigorate itself and focus on what it does best. On Wednesday, Whitman reiterated she’s “more convinced than ever” that the split will lead to “two compelling companies well positioned to win in the marketplace and to drive value for our stockholders.”

The split does come at a cost though. Once they become two separate companies, the HP’s will both need their own separate human resources departments, CFOs and headquarters and other things. These “dis-synergies”, as HP execs are calling them, are expected to cost each company around $200 million a year each.


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