HP will spend about $2 billion for its 'unprecedented' separation into two Fortune 50 companies

HP CEO Meg WhitmanHPHP CEO Meg Whitman

HP is about three months into its plans to cleave itself into two huge tech companies and it’s finally figured out how much this process will cost: about $US2 billion.

HP will spend $US1.3 billion of pre-tax separation costs in its current fiscal year (2015) and another $US500 million in its next fiscal year (2016), said HP CFO Cathie Lesjak on its quarterly earnings conference call.

There’s also approximately $US750 million of foreign taxes to pay after it pockets about $US200 million foreign tax credits, HP mentioned in the materials it published with its quarterly conference call.

“The scale of this separation is unprecedented in it’s size and complexity,” explained Lesjak.

Added CEO Whitman, “We are separating into two Fortune 50 companies. It’s hard to imagine that there are two Fortune 50 companies embedded inside HP.”

That means there’s a whole bunch of one-time costs to pay: building out two individual IT systems, plus consulting fees, legal fees, real estate expenses and those foreign taxes thanks to HP’s huge international presence.

And this doesn’t include any layoffs that might come as part of the separation costs. And they will come, Lesjak confirmed on Tuesday, although she didn’t announce how many jobs will be cut.

HP reported middling earnings and gave weak guidance on Tuesday, sending its stock down more than 7% after hours.

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