HP is expected to announce a new corporate structure on Monday that would see former Alcatel-Lucent CEO Pat Russo play a major role in the vendor's enterprise networking business, which is positioning itself as one of the major SDN systems and services suppliers.
(UPDATE: As of 8am EST, the news is official -- see HP to Split Into Two Companies.)
According to a weekend report in the Wall Street Journal (subscription required), the company's CEO Meg Whitman is set to announce that HP Inc. (NYSE: HPQ) is spinning off its printer and PC business, which generates almost half of its annual revenues -- $55.9 billion in the fiscal year that ended October 31 2013, or 48.5% of total sales. That business is set to be run by its current head Dion Weisler, with Whitman as chairman. The remaining enterprise hardware and software business, which includes its SDN offerings, would be run by Whitman, with Russo, who has been on HP's board of directors since 2011, as chairman.
Russo is a big name in the communications networking industry. As the CEO of Lucent Technologies she was one of the architects of the merger with Alcatel, and then became first CEO of Alcatel-Lucent, holding that job from late 2006 until the fall of 2008. (See Russo, Tchuruk Out at Alcatel-Lucent, Farewell, Lucent and Alcatel, Lucent Seal Deal.)
HP's decision to split itself into two companies would mark the latest twist in what has been a turbulent few years for HP, which is trying to find the optimum operational structure for the new era of networking, dominated as it is by cloud and virtualization strategies. (See HP Cuts More Jobs, HP to Axe 27,000 Staff and HP Gives 2013 Outlook, Details Revamp.)
In a bid to position itself as one of the leading players in the virtualization era, HP has been investing heavily in its SDN capabilities for the past few years. (See HP Launches SDN App Store, HP Doubles Down on OpenDaylight and HP Beefs Up Its SDN Portfolio.)
And earlier this year it created a new unit to focus on the market opportunities around NFV and appointed existing networking executive Bethany Mayer to head up that business. However, Mayer left to become the CEO of test vendor Ixia (Nasdaq: XXIA) only months after taking on the NFV role full time. (See HP Attempts NFV Surprise Despite Spoilers, HP Looks to Conquer Carriers With NFV and Ixia Hands Reins to NFV Star Mayer.)
Recent speculation suggested that HP had held merger talks with EMC Corp. (NYSE: EMC), which owns a majority stake in VMware Inc. (NYSE: VMW), but that those talks had broken down -- at least for now. (See EMC Mulls Merger With HP or Dell – Reports.)
— Ray Le Maistre, , Editor-in-Chief, Light Reading