HP Splitting Personal Computers And Printers Division From Enterprise Division

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When HP took over UK software group Autonomy the results were pretty bad. So bad, in fact that HP went into a full-blown crisis, which inspired the company to break up the two companies. This

news comes after allegations have been going back and forth between the two companies with each stating things like "fraud" and "misrepresentation" involved in the takeover with HP claiming that Autonomy overstated the number of contracts it had when the deal was being brokered.

CEO of HP Meg Whitman, whom has come under considerable fire for this whole situation, has decided to split HP's personal computers and printers business from its corporate hardware business, which has been highly profitable. Each part of the company will be worth tens of billions of dollars, though the deal itself is directed at making the large PC division easier to manage and focus on.

Whitman will take on the role of CEO of the enterprise division with Senior PC Division Executive Dion Weiser leading the PC division. In addition to that, Whitman will also be chairman of the PC division with the current Senior Independent Director, Patricia Russo, becoming chairman of the enterprise division. Some people have noted that this was the plan of Whitman's predecessor Leo Apotheker, who's idea of breaking up the two businesses was swiftly canned when Whitman took over. In addition to that, it has also been noted that both halves of the company are pretty equal in size, generating revenues of $55.9 billion last year.

HP was previously the world's biggest PC maker until Lenovo managed to snag the top spot last year. Lenovo has been increasing its presence in the American market with its low cost of production and quickly increasing technology. Whitman has had trouble finding HP's next area of growth in the computing world. Things like tablets and cloud computing have changed the face of the computing world drastically. As a result, Whitman has tried to branch HP into cloud computing, but with little success. That has also been exacerbated by her failed efforts to pull off a mega-merger with data storage giant EMC Corp.

SEE ALSO: Lenovo & Ashton Kutcher Are Giving Us A Tablet With A Built-In Pico Projector!

Whitman is looking at the need to not only cut costs due to the falling sales of traditional PCS. What's more is that Whitman and HP are also dealing with the need to cut tens of thousands of staff members around the world. The decision by HP to divide the two companies will likely be seen as positive by those on Wall Street due to the fact that investors have been demanding sprawling companies with diverse interests break up into smaller divisions that are easier to value and easier for management teams to oversee.

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HP Will Be Paying Out $16.25 M in Settlement

HP is a very well-known technological name, but the company is really not having the best of years so far in 2010. It’s not their sales numbers or their products; it’s something very different that they had complete control over. On Wednesday, the Department of Justice announced that HP will be paying out $16.25 million in order to settle e-rate fraud charges.

The Department of Justice and the Federal Communications Commission say that contractors for HP “wined and dined” certain Dallas public school officials so that they would be able to obtain insider information that would assist them in winning competitive e-rate contracts from the school system. These contracts are a government program that work to fund Internet connections in public schools and libraries.

Now, HP’s contractors did more than just take workers from the Dallas Independent School District and the Houston Independent School District out to dinner or something like that. These contractors bought the school officials lavish gifts that included things like yacht trips and tickets to the 2004 Super Bowl. All of these gifts helped HP to secure the contracts that they wanted. These contracts included more than $17 million worth of HP equipment. The government was tipped off about HP’s dealings with the school districts. This prompted the Department of Justice and the Federal Communications Commission’s investigation of the allegations.

As a result of HP’s dealings and of the Federal Communication Commission’s investigations, they will be paying out $16.25 million. The FCC says that most of the money will be returned to the e-rate program. They have also said that in the future they will make sure that HP follows all of the e-rate requirements so that this does not happen again.

"The FCC's compliance agreement with HP ensures that HP will train its employees thoroughly on the FCC's gift and other e-rate rules and provides for audits of HP's e-rate business," said the general counsel of the FCC, Austin Schlick. "If HP fails to monitor its e-rate activities closely and abide by e-rate program requirements, it will face substantial penalties."

HP said that they have now dismissed all of the contractors that broke the rules concerning the e-rate contract. “HP requires that all employees and partners adhere to lawful and ethical business practices," stated the company. "The activities at the center of this investigation occurred more than five years ago, the partner relationships have been terminated, and the employees involved are no longer with the company." They also added, “HP fully cooperated with the authorities, and the matter is now resolved.”

The chairman of the FCC, Julius Genachowski, said, “Broadband is key to our children's 21st century education. That's why one of the FCC's top priorities is making sure e-rate works to benefit students and libraries. Today's settlement shows the extensive efforts of the FCC and DOJ to protect the e-rate program from waste, fraud, and abuse, and to deter misconduct in the future."

The FCC edited the e-rate program slightly in September so that there would be no misunderstandings or abuses concerning the rules about soliciting or receiving gifts within the program. They also added a few rules to make sure that the bidding process was completely fair for everyone that is involved.

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