Hewlett-Packard Company (NYSE:HPQ) is headed towards a breakup amid hope and fear for some. The resulting entities from the split are expected to fall below names such as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) in Silicon Valley tech firms annual ranking known as SV150. The hope in the breakup is that the emerging companies, HP Inc and HP Enterprise Inc, will be more focused and streamlined to generate greater shareholder value. The fear is that neither HP Enterprise nor HP Inc will be able to defend the No. 2 position of the larger HPQ in the SV150 ranking.
At best, both HP Inc and HP Enterprise are expected to battle for the fourth and fifth positions with Cisco Systems Inc (NASDAQ:CSCO) in SV150 ranking. Apple dethroned Hewlett-Packard Company (NYSE:HPQ) from the No.1 position in terms of sales in 2012, but Google is likely to take up the No.2 spot as the giant of all times HPQ fragments into smaller units that are more nimble.
Hewlett-Packard Company (NYSE:HPQ) is best-known as the company that successfully rode the PC revolution back in the 1990s. The company was also caught up in the so-called dot-com boom and later the dot.com bust. However, it has been a completely different story for HP in the rise of mobile and cloud technologies.
Growing through acquisitions
In its heydays, Hewlett-Packard Company (NYSE:HPQ) listed to Wall Street, acquiring assets and taking special focus on some markets to fuel its growth while at the same time adjusting for risks. For the most of its years, HPQ ranked at No.1 in the SV150 report, until Apple came up forcefully in 2012 to push it down to No.2 in terms of sales.
However, Hewlett-Packard Company (NYSE:HPQ) is listening to Wall Street again, this time around deciding to unwind. While the split is expected to lead to creation of more shareholder value, analysts say that HPQ has to go back to the roots to see meaningful profitability. Going back to the roots means sharpening its innovative edge because it was innovation that powered its gains in the formative years and later in its successful life.