HEWLETT-PACKARD TO SPLIT IN TWO.

Byline: Martha Mendoza Associated Press 

Hewlett-Packard Co., a pioneer of the high-tech age and one of the largest computer companies in the world, is hoping to boost some of its sagging businesses by splitting into two separate ventures.

Hewlett-Packard joins a growing list of companies that have voluntarily broken themselves up to become more profitable, including AT&T Corp. and ITT Corp.

``We are a granddaddy around here. We've also grown very large,'' said Hewlett-Packard president Lewis E. Platt on Tuesday. ``By making this move, we believe we can make two new companies that are more focused and more nimble.''

Founded 60 years ago in a Palo Alto, Calif., garage by Stanford University graduates Bill Hewlett and Dave Packard, the company first gained notoriety as a maker of electronic testing gear.

It is now the 22nd-largest company in the United States. Its major products include the powerful computers called servers that run networks of desktop machines. It also has a large printer business along with a range of roughly 29,000 products used by consumers, industry, engineering, science, medicine and education.

The split will form a company with the computer and imaging businesses with roughly $40 billion in revenue, and a second, much smaller company including testing and measuring, components, chemical analysis and medical segments. This one will have about $7 billion in revenue.

Lower prices for personal computers have cut into HP's profits of late, contributing to a stock price that has lagged behind the overall stock market over the past two years. The measurement and testing businesses have been more profitable.

In its most recent quarter, the company beat Wall Street expectations as it reported earnings of $960 million. But Hewlett-Packard called revenue growth weak and reported softness in some of its businesses.

After the split-up, executives hope the companies can be more entrepreneurial. In addition, investors will have a clearer choice when deciding which stock to purchase.

The company's board of directors approved the realignment plan at a special meeting Tuesday morning.

Each company will also have its own headquarters and board of directors. The computer business will retain the Hewlett-Packard name, while the second company will get an as-yet undetermined title.

Wall Street was enthusiastic over the planned split. Hewlett-Packard stock closed up $2.75 a share to $68.625 a share in the New York Stock Exchange Tuesday.

Analysts were equally optimistic.

``They have demonstrated tremendous ability over the years to adapt to changing markets and technologies,'' said Nathan Brookwood at Insight 64 in Saratoga, Calif.

Platt, who joined Hewlett-Packard in 1966, said that he will remain as chairman of the board, president and chief executive officer throughout the restructuring. But he said that at the age of 58, he is looking toward retiring within the next few years.

``I'll be here to complete the separation,'' he said. ``What happens after that is not yet known.''

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PHOTO (Color) Palo Alto-based Hewlett-Packard Co., which announced it is splitting itself, is the nation's 22nd-largest company.

Paul Sakuma/Associated Press