Tag: split

Samsung Electronics considers split

Ned's_executionSouth Korea’s Samsung Electronics is considering doing an HP and splitting itself into two.

The plan was originally mooted by US activist hedge fund Elliott Management.

According to the Seoul Economic Daily the split give the heirs of the founding Lee family a much stronger hold on the global smartphone outfit. Elliott suggested the split in October to boost shareholder value.

Samsung’s board of directors will meet on Tuesday and respond to Elliott’s proposals. Samsung Electronics is not saying anything.

If it follows the House of Elliott plan, Samsung Electronics is to divide into a holding vehicle for ownership purposes and an operating company. It will pay a $26 billion special dividend, pledge to return at least 75 percent of free cash flow to investors and agree to appoint some independent directors.

The conglomerate’s reorganisation efforts have accelerated since Jay Lee took over the reins after his father and Samsung patriarch Lee Kun-hee was incapacitated following a May 2014 heart attack.

It has flogged off non-core assets and merged two affiliates in 2015 to consolidate stakes in key affiliates under a company controlled by Jay Lee and his two sisters.

“Even if Samsung Electronics does not comment on specifics such as the timing of a split … the firm will at least say it will implement ownership structure changes in a reasonable manner,” HI Investment said in a report.

Xerox gets a new head

copycatXerox has appointed Jeff Jacobson, the president of its technology unit as its new CEO after the company splits its business process outsourcing unit into a separate, publicly listed entity.

Jacobson, 56, joined Xerox in 2012 and he was appointed the president of the technology business, which includes the company’s hardware and software offerings, in July 2014.

Xerox will house the company’s legacy printer business. Its business process outsourcing operations will be held under “Conduent”, which will be led by Ashok Vemuri.

Xerox, which announced the split in January, said its current CEO Ursula Burns would become the chairman of the printer company after the separation is completed at the end of 2016.

HP splits itself apart

Meg WhitmanHewlett Packard is no more because it has cut itself into two.

And this morning CEO Meg Whitman (pictured) will open trading on the New York Stock Exchange as the CEO of Hewlett Packard Enterprise (HPE).

The other bit of HP will be headed by Dion Weisler.

Over the last three months or so, both companies have been working out how the nuts and bolts of both businesses work, and have already divided their support web sites so that if you need a bug fix or an upload, you get directed to the relevant pages.

HPE will deal as its name suggests with the enterprise side of business, while HP Inc will carry on selling printers, PCs and the like.

The split actually happened yesterday after HP’s Whitman said it would divide itself in two in early October.

HP was formed by Dave Packard and Bill Hewlett and went into business in 1939.

HP had a rough time in the early years of this century under the stewardship of Carly Fiorina. Then followed Mark Hurd, who now works for Oracle, followed in rapid succession by Leo Apotheker, who mastermind buying Autonomy for $10 billion.

He only lasted for just under a year.

HP will lose 30,000 more jobs

BN-EE799_hp0820_P_20140820164645It looks like HP’s split into two companies will not save jobs – in fact, 30,000 more will go in the restructuring.

The purge will occur within the newly formed Hewlett Packard Enterprise, a bundle of technology divisions focused on software, consulting and data analysis that is splitting off from the company’s personal computer and printing operations.

The spinoff will be completed by the end of next month, dooming 25,000 to 30,000 jobs within HP Enterprise. The target means 10 to 12 percent of the 252,000 workers joining HP Enterprise will lose their jobs as part of the company’s effort to reduce its expenses by $2 billion annually.

About 50,000 workers will remain at HP, which become the new name for the company retaining the PC and printer operations.

This means that since CEO Meg Whitman took control of the company more than 88,000 people have collected their layoff notices. Mostly the problems have been caused by acquisitions that have not panned out and a slump in PC sales.

HP’s layoffs have been demoralizing blow to a company that provided a template for future Silicon Valley entrepreneurs when William Hewlett and David Packard founded it 76 years ago. Hewlett and Packard later embraced an employee-friendly philosophy that became known as the “HP Way.”

The HP Way was more or less killed off by the winsome CEO Carly Fiorina who is now a candidate for the Republican Party’s nomination in the 2016 race for president. Fiorina engineered a $25 billion acquisition of PC maker Compaq that angered many shareholders, including heirs of the company’s founders. She cut more than 30,000 jobs before she was fired.

Still HP remains one of the world’s biggest technology companies. HP Enterprise expects to have more than $50 billion in annual revenue.

“Hewlett Packard Enterprise will be smaller and more focused than HP is today,” Whitman promised in a Tuesday statement.

Qualcomm split subject to Heisenberg

HeisenbergQualcomm appears to have added up the numbers and is fast reaching the conclusion that it is not quite, but is completely and utterly uncertain about hiving off its chipmaking arm.

The outfit was under pressure from its activist shareholders Jana to sell off its chipmaking side and concentrate on a more lucrative patent trolling business.

Qualcomm President Derek Aberle said he was still looking into it but said a review of a possible split will not be complete until the end of the year.

Aberle agreed with Jana that its stock is undervalued but was still not sure that spinning off Qualcomm’s two divisions was the answer.

“You have to step back and say why that is and would a separation solve whatever the underlying issues are that are creating the current valuation? You have to be careful that it’s not too simplistic an analysis.”

The company’s current structure allows Qualcomm to use its relationships with Chinese customers since the chipmaker is well positioned to help them expand to other countries.

Aberle acknowledged that having chip and licensing divisions created conflicts with customers, “but we manage it pretty well”.

Qualcomm was approached by Jana, a hedge fund which owns $2 billion in stock. Aberle said the outfit did not pressure Qualcom to pursue a breakup but rather wanted them to review a split as one option to unlock value.

It is also working on adding a third independent board member, whom Aberle declined to name. Qualcomm has already added two new board members in cooperation with Jana.

“A lot of the things Jana put on the table were very consistent with things we’d already been talking to our shareholders about and already been planning for a long time,” Aberle said.

Qualcomm said in July it would reduce costs by about $1.4 billion, cut about 4,500 full-time staff, or 15 percent of its workforce, and boost capital returns to shareholders.

HP on track for split by Christmas

sliceThe maker of Expensive printer ink which is more precious than gold, weight for weight, said it is on track to cut itself in two by the end of the year.

In a filing with the US Securities and Exchange Commission,  it said it would complete the process by the end of the fiscal year 2015.

Under the plan, the company will divide its personal computer and printer businesses from its corporate hardware and services operations.

The corporate division will be known as Hewlett Packard Enterprise and provide technology solutions, besides cloud and mobile services. It will comprise the company’s enterprise group, enterprise services, software and financial services businesses.

The filing provides detailed information on the business and historical financial results of Hewlett Packard Enterprise, assuming it to be a stand alone company.

In fiscal 2014, Hewlett Packard Enterprise would have posted a profit of $1.6bn on revenue of $55.1 billion, down 19 percent and four percent, respectively, on a year-on-year basis.

The company’s printing and personal systems businesses will operate separately as HP, which currently holds the number one position in printing and number two position in consumer personal systems segment in terms of shipments.

Meg Whitman, chairman, president and CEO of HP said that this separation will create two “compelling” companies well positioned to win in the marketplace and to drive value for our stockholders.

Qualcomm denies it is about to be split

184owiq3hokyhjpgUS chipmaker Qualcomm said that it has no plans to spin off its chips business at present, despite calls from some of its investors.

Executive Chairman Paul Jacobs said all this intensifying industry competition was not enough to spin off his chip business from its patent-licensing business.

The idea was mooted by hedge fund Jana Partners in April Qualcomm on the grounds that it would improve shareholder value. Jana claimed that the chip business “essentially worthless” and Qualcomm could make more money in the patent trolling business.

Jacobs said the idea has been talked about for a long time, but he thought that the status quo had a lot of synergies and they don’t really make them much any more.

“Having the businesses together outweighs the dissynergies” well the business would be much heavier for a start.

Jacobs said, however, that the company is always evaluating its options and that the situation could change in the future.

Motorola splits its sides

Phone maker Motorola has been formally cleaved asunder and goats have been sorted from the sheep.

The outfit has divided itself into two companies which its managers hope will be a little more focused.

The two new companies are called Motorola Mobility, which sounds like an outfit which takes the elderly to the library every Wednesday, and Motorola Solutions which sounds like something you rub onto piles.

It has taken the managers three years to engineer the split. The company has been the sum of its parts for nearly 82 years now. It invented the mobile phone but managed to lose $4.3 billion between 2007 and 2009 because it could not sell them properly.

Sanjay Jha, who is now the chief executive of Motorola Mobility, managed to turn the outfit around by betting heavily on Android and the fact that Verizon needed a competitor to the iPhone that did not require it to sell its soul to Steve Jobs.

The split means that the outfit is now a smaller fish who has to compete with whales like Samsung.

Jha plans to refocus on a smaller slate of high-end smartphones and new devices, such as a tablet computer, following his company’s launch of 23 smartphones in 2010.

Motorola Solutions gets about a third of its revenue from selling companies a variety of handheld communication and computing devices. Extra if it has to rub in the Solution itself.

The rest of the cash half of the company comes from selling public-safety equipment, such as radios, to local governments. Any extra cash the outfit gets will be invested in coming up with natty public-safety applications of 4G wireless technology and video surveillance.

However,  Motorola Solutions is vulnerable because many public bodies, such as local councils have had to cut back on their budgets. Some US Cities have even laid off coppers so paying more cash to give them natty 4G radios is unlikely.

The downside of the move is that two companies could become prey to a hungry investor who would be after one smaller cheaper company rather than one big one.

Carl Icahn has been identified as one such investor. He has bought more than $2 billion of Motorola stock over the past four years and argued for the split.

Vodafone CEO says Verizon merger unlikely, split possible

Vittorio Colao, CEO of Vodafone, has said today that a merger with Verizon is unlikely, despite pressure from shareholders to merge.

Vodafone owns a 45 percent stake in Verizon, the rest of which is owned by Verizon Communications, but despite the large percentage of shares it owns Vodafone does not receive a dividend from it, which has led shareholders to moan about the company getting a poor deal.

This, in turn, has given rise to analyst speculation that both companies would merge to resolve the problem, but Colao isn’t so sure that is the route they will take.

“Theoretically, conceptually, it’s an option, but practically it’s less likely than the other two,” he said at the Goldmine Sex conference. 

The other two options he referenced included Verizon paying out a dividend to both Vodafone and Verizon Communications, rather than just the latter, or for Vodafone to split from Verizon altogether, which he said would be a less complex solution than a merger.

The comments suggest that if Verizon is unwilling to fork over a dividend then Vodafone will put its shares in the company on the market. With no dividend on offer, however, it is not certain how appealing those shares will be for another company looking to make a profit.

Motorola reveals details of company split

Motorola has revealed details of its plan to split into two companies in the first quarter of 2011, one focusing on its mobile business and the other specialising in the enterprise sector.

The company has filed a Form 10 Registration Statement with the Securities and Exchange Commission, which provided information about Motorola SpinCo Holdings, the subsidiary that will be in charge of setting up the new spin-off companies.

It will be setting up Motorola Mobility, to be headed by Sanjay Jha, current co-CEO of Motorola and CEO of the Mobile Devices and Home Businesses division. This company will take control of Motorola’s handset and home entertainment developments.

A key focus for Motorola Mobility will be “multiscreen experiences”, allowing users to view the same content across multiple platforms, including mobile phones and TVs. This suggests that Motorola is keen to follow in Samsung’s footsteps with its BaDa operating system. Samsung is planning to offer multiscreen experiences across a variety of mediums, including phones, TVs, laptops, and even its own Tablet PC – all completely integrated by BaDa. Deja Vu? Maybe, but with Motorola losing ground to other key players in the mobile market, creating a multi-device experience may be just what it needs to gain the edge. It’s a wise move.

As someone commented on our story about Samsung’s Tablet PCs and multi-screen platform strategy: “Integrating all of your screens to work with a T-PC is genuinely the most revolutionary thing that I’ve heard in a long time.”

The remainder of Motorola will be renamed to Motorola Solutions and will be headed by the other co-CEO, Greg Brown. His company will specialise in Enterprise Mobility Solutions and Network units, which includes wireless LAN gear, public safety communications equipment, and service-provider networks. This will effectively serve as Motorola’s enterprise division, which requires a lot more integration work in a different way than its home division does, one of Motorola’s claimed reasons for the split.

The split into these two companies will be made through a tax-free stock dividend of shares to its current shareholders. Motorola made a profit of $0.03 per share in the first quarter of 2010 by selling shares worth a total of $5 billion, but the company has been struggling during the recession and due to strong rivaly in the smartphone market by the likes of Apple, HTC, RIM, and Nokia

It forecasts growth in sales of its mobile phones by the end of the year, but it is likely that the division into two companies is aimed at giving its Mobility division a new focus that will aid its faltering sales in the mobile market.

TechEye had a quick chat to Ross Rubin, analyst at NPD Group, who told us when it comes to performance checking, it’ll have the edge over rivals like Nokia and RIM: “The division of Motorola will make it easier for investors to evaluate the company in the core wireless business, which has different dynamics than the cable industry serves by the rest of Motorola. It can judge its performance more easily vs. companies such as Nokia and RIM.”