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Spinoffs
The separation of Hewlett-Packard into two $50 billion-plus companies over the coming
year will be a test case in how corporate spinoffs can be orchestrated, according to Wharton
management professor Emilie R. Feldman. When Meg Whitman, chair and CEO of the Palo
Alto, Calif.-based company made the split announcement earlier this month, it marked a
departure from years of growth through acquisitions.
The company that William Hewlett and Dave Packard founded in a one-car Palo Alto garage
75 years ago will be split into Hewlett-Packard Enterprise, focused on technology
infrastructure, software and services for business customers, and HP Inc., the firms
personal computers and printer business. HP expects to complete the split by the end of
2015. The company is on track to maintain this years revenues at last years level of $112
billion.
Growing Apart
Divestitures and spinoffs are the ugly stepchild of corporate strategyTwitter , Feldman said
on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111.
(Listen to the podcast at the top of this page.) They are viewed as acknowledgements of
failures, bowing to pressure from investors and competitors. In reality, spinoffs can be used
very proactively, as we are seeing in the HP case, to create value for shareholders and
separate businesses that dont belong together anymore.
Over the past year, Feldman has conducted research on what happens when managers and
directors take on roles in companies that have been separated by spinoffs. She found the
latest developments at HP an exact reflection of that setting.
According to Feldman, much research is focused on the post-merger integration of
companies studying issues such as how to bring two companies together, how to manage
culture clashes, how to integrate management teams, etc. But post-divestiture disintegration
is vastly understudied comparatively, she said.