HP splits in two

BY Richard Summerfield

Computing giant Hewlett Packard has unveiled plans to separate its business into two distinct publicly traded entities, one consisting of the company’s personal-computer and printer operations, the other its corporate hardware and services business. The division of the company will see HP shed around 5000 jobs and is expected to be complete by the end of 2015.

According to HP, the company’s software and services businesses will be known as Hewlett-Packard Enterprise. The other side of the business – the PC and printing units – will be known as HP Inc, and will keep the existing HP logo. The firm’s incumbent chief executive, Meg Whitman, will continue to run Hewlett-Packard Enterprise and act as chairman of the PC and printing business. HP’s chief financial officer, Cathie Lesjak, will also remain with the enterprise company. Dion Weisler, current head of the printing and personal systems group, will lead HP Inc. Pat Russo will assume the role of chairman of HP Enterprise. “In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders,” said Ms Whitman in a statement announcing the division.

HP is believed to have considered a separation of its PC business for some time. Indeed, in 2011 the firm announced that it was contemplating spinning off or selling its PC unit, allowing it to focus on selling servers and other equipment to business customers, much like competitor IBM had done six years earlier. However, the proposed spinoff was halted by spooked investors who felt that the separation would jeopardise both branches of the company. The plan was cancelled and the chief executive responsible for the proposal – Léo Apotheker – was dismissed.

Based on revenues generated during the last financial year, the separation of the HP units will create two roughly equally-sized firms. The company’s PC and printer businesses produced revenues of $55.9bn in its last financial year, almost identical to the combined $55.7bn of its enterprise computing, services and software divisions. In trading following the announcement, HP’s stock jumped nearly 5 percent.

HP’s announcement came just days after US e-commerce giant eBay Inc declared its intention to spin off its PayPal business into a separate publicly traded company in 2015.

Source: HP to Separate Into Two New Industry-Leading Public Companies

CFO risk appetite at seven year high

BY Richard Summerfield

Despite ever increasing uncertainty surrounding the economy of the eurozone and emerging markets, risk appetite among the chief financial officers (CFOs) of the UK’s largest firms is at a seven year high, according to a new report from Deloitte.

Deloitte surveyed 118 CFOs of FTSE 350 and other large private UK companies for its ‘The Deloitte CFO Survey – Q3 2014’ and found that British companies are feeling more confident about taking on business risk than at any other point since 2007. The growth in CFO risk appetite has been predicated on a rebound in the US economy, improving UK growth and the current ease of access to finance. Seventy-two percent of CFOs surveyed said now was an opportune time to take risk onto their balance sheets, up from 65 percent of respondents in Q2 2014.

"With a resurgent US economy, good growth in the UK and plentiful liquidity, CFOs have shrugged off the effects of rising uncertainty and weakness in Europe, sending corporate risk appetite to a seven year high,” said Deloitte chief economist Ian Stewart. “Expectations for corporate revenues and margins remain close to the four year high seen in Q2.”

Yet despite the uptick in risk appetite, perceptions of financial and economic uncertainty also rose in the third quarter for the first time in two years. Fifty-six percent of CFO’s surveyed noted that the level of financial and economic uncertainty that their firms were facing was above normal, high or very high. In Q2 that figure was just 49 percent.

Sentiment about the eurozone has deteriorated significantly in 2014, with a net percentage of -39 percent of CFOs seeing improving prospects for the region going forward, down from +54 percent in Q1 2014. Confidence in emerging markets also continued to decline, with a net balance of -13 percent seeing an improvement. Despite those concerns, CFOs are considerably more optimistic about UK prospects, with a net balance of +85 percent reporting improved growth prospects over the last six months.

In many respects, political upheaval was more of a concern for CFOs than any economic issues during Q3. The potential secession of Scotland from the United Kingdom was a contributing factor to rising uncertainty, along with the impending general election and possible referendum on EU membership. CFOs perceived these scenarios as a greater risks to their firm’s prosperity than an increase in interest rates or weaknesses in the eurozone.

Source: The Deloitte CFO Survey

EU proposes harmonised trade secret protection

Only two-thirds of EU member states have specific legislation protecting trade secrets, and trade secret protection varies widely. This acts as a significant barrier to legal and commercial certainty across Europe, and restricts innovation and exploitation of trade secrets across the European market. The EU's proposed Directive on the protection of trade secrets is a positive step towards effective harmonisation across EU member states and, for the first time, will establish a recognised framework of minimum protections regarding abuse of trade secrets.

FW spoke to Warren Wayne, Robert Williams and Simon Shooter at Bird & Bird, about protecting trade secrets in the European Union.

TalkingPoint: Protecting trade secrets in the European Union