It’s been three months since HP started planning its split into two huge tech companies... and now it’s figured out how much money it will cost.
During the quarterly earnings conference call, HP’s chief financial officer Cathie Lesjak explained how much the split will cost the company, and what it means for future business.
The company will need to spend about $2 billion (£1.3 billion) to split into two Fortune 50 companies – $1.3 billion (£837 million) of pre-tax separation costs in its current fiscal year (2015), and another $500 million (£322 million) in its next fiscal year (2016).
In the materials published with the conference call (PDF) it also says that the company will pay some $750 million (£483 million) of foreign taxes, after it receives about $200 million (£130 million) of foreign tax credits.
“The scale of this separation is unprecedented in it’s size and complexity,” explained Lesjak, Business Insider reports.
CEO Meg Whitman added, “We are separating into two Fortune 50 companies. It’s hard to imagine that there are two Fortune 50 companies embedded inside HP.”
Creating two huge companies out of one even bigger requires a lot of one-time costs, like setting up two individual IT systems, consulting fees, legal fees, and the foreign taxes thanks to HP’s enormous presence on the international stage.
Currently, no layoffs have been mentioned, however, people will be losing their jobs in the future, that’s certain.
Lesjak confirmed on Tuesday that layoffs will come, however she didn’t go into details on how many jobs will be cut.
Author: Sead Fadilpašic