What's going on?

Hewlett-Packard (HP) is no longer the same old HP: it split into two companies on November 1st. On Tuesday HP reported earnings as a combined company for the last time (it wasn�t pretty, with revenues down almost 10%) and, for the first time, the two new companies gave their future profit expectations. The two companies will be called HP Inc. and HP Enterprises.

What does this mean?

HP Inc. is going to resemble the HP we grew up with: it will sell PCs and printers. Investors didn�t like the future profit predictions it released on Tuesday as they sent the stock down more than 5% in immediate trading. HP Enterprises is going to focus on the new stuff like data storage, e.g. �the cloud�. In theory, it is going to act more like a �growth� company. Some analysts expect it to make an acquisition to essentially buy innovative technology that someone else has invented (HP has for years been criticized for its�lack of innovation). Investors sent the stock up 3% in immediate trading after the results and future guidance.  

Why should I care?

1. The bigger picture: The stronger US dollar really hurts HP. Both HP companies have overseas sales that result in fewer US dollar denominated profits (when exchanged back into US dollars). But since printer and computer companies are often based�overseas, it becomes cheaper for foreign companies (like Canon in Japan) to produce�them - and thus they can undercut HP on price.
2. For the stocks: Both companies face significant challenges. HP Inc. is a mature player in a declining market � not an intuitively great place to invest (although it will try to create new products, for example with 3D printing, and will perhaps be successful). HP Enterprise must develop (or buy) the right technology and sell it to their business customers � and the jury is still out on whether it can do so.