HP on Wednesday took a major step forward in its plan to split into two huge companies. It filed a 316-page document with the SEC that offered more details on the new HP company, HP Enterprise.
The company plans to complete the split on November 1, the day after its fiscal year closes on October 31, although it did not commit to that date in these documents.
HP will divide itself into a company called HP Inc. that focuses on its PC and printer business, and will retain the NYSE trading symbol HPQ.
The second company, HP Enterprise, will contain everything else (servers, software, consulting services, etc.). HP Enterprise also plans to trade on the NYSE under the new symbol HPE.
Even with 300+ pages, HP didn’t answer every question, such as how many shares of HP Enterprise investors will get for each share of HP they own today, or which HP subsidiaries will be attached to which company, or who will be on HP Enterprise’s board of directors.
But we did glean several interesting insights from the filing:
- The two companies have agreed not to poach each other’s employees. They can’t hire employees from the other company for six months and can’t even approach employees about job openings for a year. The one exception: if the employee was terminated by one company the other company is free to hire them.
- They have agreed not to compete with each other for three years after the split.
- They will partner to buy supplies, to jointly sell products to customers, and to share patents and other intellectual property.
- The units that comprise HP Enterprise generated net income of $US1.6 billion from revenues of $US55 billion, sales outside the United States constituted approximately 62% of our net revenue in fiscal 2014. Nearly every single product line in the new HP Enterprise experienced a decline in revenues over the past six months
- HP’s top executives will continue to be paid about the same as if the two companies stayed together, with golden parachutes intact. Whitman was paid $US19.6 million in 2014, mostly in stock although she did get a raise in her salary, too, from $US1 (yes, one dollar) to $US1.5 million. She also got a $US4.3 million cash bonus.
- CEO Meg Whitman will not be the chairman of HP Enterprise. The initial chairman will be Patricia Russo, best known as the former CEO for telecom equipment maker Alcatel-Lucent from 2006 to 2008. Russo joined HP’s board in 2011, when Whitman joined the board (before Whitman became CEO). Whitman has previously said she will be the chairman of HP Inc., the PC/printer company.
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