Hewlett-Packard Will Split Up Company Four Business Sectors Will Form New Corporation

The Hewlett-Packard Co. division at Liberty Lake will soon be part of a new company with a new name.

Hewlett-Packard announced plans Tuesday to split off four of its business segments and turn them into one separate, public company.

The new “measurement” corporation, which has yet to be named, will be composed of Hewlett-Packard’s test and measurement, components, chemical analysis and medical businesses. These operations made up $7.6 billion of H-P’s $47.1 billion in revenues in fiscal year 1998.

The other Hewlett-Packard operation will keep the company’s name and focus on computers, printers and information services.

“We are taking this action to sharpen the strategic focus of our businesses, improve their agility and increase their responsiveness to customers and partners,” Hewlett-Packard president Lewis Platt said in a statement.

The H-P division at Liberty Lake, which employs about 960, makes testing equipment for the wireless phone industry. Circuit boards are also assembled there.

Liz Cox, a local H-P spokeswoman, said the Liberty Lake facility will remain intact when folded into the new company. She added that the ongoing transfer of employees to Spokane from H-P’s Loveland, Colo., division should not be disrupted by the change.

Cox said H-P employees here were notified about the changes Tuesday morning.

Ned Barnholt, an H-P executive vice president, was named CEO of the new company.

Cox said Barnholt was the first general manager of H-P’s Liberty Lake facility in 1980. Barnholt left in 1985 to take another job within Hewlett-Packard, Cox said.

In a conference call with analysts, Barnholt said, “I think today’s realignment will make a big difference in our company’s ability to thrive.”

Hewlett-Packard is planning an initial public offering for about 15 percent of the new company’s shares by year end.

Following the offering, H-P plans to distribute the remaining shares to stockholders, tax free.

H-P directors approved plans for the reorganization at a special meeting on Tuesday morning.

When the changes are completed, both corporations will have their own board of directors and CEOs.

A name for the new company will be selected in the next few months.

Analyst Tim Bajarin, president of Creative Strategies Inc. in Campbell, Calif., said that in light of those recent struggles, the restructuring makes a great deal of sense.

“Each one can take their own focus,” he said of the two companies. “Certainly the PC side is going to need to be more nimble and responsive.”

Hewlett-Packard said it does not expect a significant work force reduction as a result of the reorganization.

But CEO Platt will step down from his post next year. He will stay with the company until the reorganization is finished, which is expected to be in the middle of the year 2000.

A search for a new Hewlett-Packard CEO is under way.

Platt, 57, is nearing the standard retirement age for Hewlett-Packard employees, which is 60.

Hewlett-Packard’s stock responded well to Tuesday’s news, closing up $2.75 at $68.63.

The Associated Press contributed to this story.