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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1407)	3/2/1999 7:41:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

H-P to split in Two --!!!!> Hewlett-Packard To Restructure By MARTHA MENDOZA AP Business Writer SAN JOSE, Calif. (AP) -- Hewlett-Packard Co., a pioneer of the high-tech age and one of the largest computer companies in the world, is hoping to boost some of its sagging businesses by splitting into two separate ventures. The company joins a growing list that have voluntarily broken themselves up to become more profitable, including AT&T Corp. (NYSE:T - news) and ITT Corp. ''We are a granddaddy around here. We've also grown very large,'' said Hewlett-Packard president Lewis E. Platt on Tuesday. ''By making this move, we believe we can make two new companies that are more focused and more nimble.'' Founded 60 years ago in a Palo Alto garage by Stanford University graduates Bill Hewlett and Dave Packard, the company first gained notoriety as a maker of electronic testing gear. It is now the 22nd largest company in the United States. Its major products now include the powerful computers called servers that run networks of desktop machines. It also has a large printer business along with a range of roughly 29,000 products used by consumers, industry, engineering, science, medicine and education. The split will form a company with the computer and imaging businesses, with roughly $40 billion in revenue, and second much smaller company including testing and measuring, components, chemical analysis and medical segments. This one will have about $7 billion in revenue. Lower prices for personal computers have cut into HP's profits of late, contributing to a stock price that has lagged behind the overall stock market over the past two years. The measurement and testing businesses have been more profitable. In its most recent quarter, the company beat Wall Street expectations as it reported earnings of $960 million. But Hewlett-Packard called revenue growth weak, and reported softness in some of its businesses. After the splitup, executives hope the companies can be more entrepreneurial. In addition, investors will have a clearer choice when deciding which stock to purchase. The company's board of directors approved the realignment plan at a special meeting Tuesday morning. Each company will also have its own headquarters and board of directors. The computer business will retain the Hewlett-Packard name, while the second company will get as yet undetermined title. Wall Street was enthusiastic over the planned split. Hewlett-Packard stock closed up $2 3/4 a share to $68 5/8 a share in New York Stock Exchange Tuesday. Analysts were equally optimistic. ''They have demonstrated tremendous ability over the years to adapt to changing markets and technologies,'' said Nathan Brookwood at Insight 64, in Saratoga, Calif. ''I think this is one more good move in a long tradition of sound business decisions.'' Analyst Tim Bajarin, president of Creative Strategies, Inc. in Campbell, Calif. said that each of the two new businesses can take their own focus. ''Certainly the PC side is going to need to be more nimble and responsive,'' he said. In one the most significant of Corporate America's recent splitups, AT&T in 1996 separated its long-distance, telecommunications equipment and computer segments into three companies. The telecom company, Lucent Technologies, in particular has achieved rapid profit growth and its stock market value last year surpassed AT&T. ITT split its manufacturing, hotel and insurance businesses in 1995. Those companies have seen varied results. Platt, who joined Hewlett-Packard in 1966, said that he will remain as chairman of the board, president and chief executive officer throughout the restructuring. But he said that at the age of 58, he is looking toward retiring within the next few years. ''I'll be here to complete the separation,'' he said. ''What happens after that is not yet known.''