PALO ALTO, Calif. — Meg Whitman knows a thing or two about Herculean tasks.

After all, she did raise eBay from humble beginnings to help create an e-commerce powerhouse whose market capitalization is now $34 billion. She took on political legend Jerry Brown in an unsuccessful bid to become governor of California in 2010. And she ditched a successful career in venture capital to attempt to return an American business icon, Hewlett-Packard, to glory.

She apparently saved the most difficult challenge for last: Split HP into two Fortune 50 companies, each $50 billion behemoths that separately serve the PC and enterprise markets while competing with the likes of IBM, Oracle, Dell-EMC and other tech giants.

“We’re turning around an icon … that lost its way,” Whitman, 59, says. “We’re trying to set the company up for the next chapter by laying the pipes and remodeling the house.” 

On Sunday, it becomes official with the formation of Hewlett Packard Enterprise (HPE), which will concentrate on selling hardware like servers to businesses in need of building their data centers, and HP Inc., which will sell PCs and printers to businesses and consumers.

“The split will be good,” says Paul Teich, principal analyst at high-tech research and advisory firm Tirias Research. “It will allow them to focus on product development, infrastructure software and help redefine (PCs and printers). They can legitimize 3-D printing, for example.”

USA TODAY gained behind-the-scenes access to Whitman, who will run HPE, and other HP executives in the weeks leading up to the tech pioneer’s historic split. Last week, this reporter sat in on an executive briefing at HP headquarters here, where Whitman, Chief Technology Officer Martin Fink, Chief Information Officer Scott Spradley and others met with start-ups and Hewlett Packard Ventures.

As arduous struggles go, the split is a multibillion-dollar doozy. HP is leaking tens of thousands of jobs, locked in a decades-long pitched battle with other behemoths and straining to regain its cultural identity.

Some analysts have expressed skepticism about the split, announced a year ago. In a note, Bernstein Research warned of spinoff-related costs and weakened “synergies” between the two new companies.

Whitman, former vice president of strategic planning at Disney,  who attained celeb status as eBay’s hard-charging CEO from 1998 to 2008, acknowledges the challenge of reversing a horrific stretch of big deals gone sour (such as HP’s troubled $10.3 billion acquisition of enterprise software company Autonomy in 2011) and a revolving door of CEOs before her (Carly Fiorina, Leo Apotheker, Mark Hurd). “There were quite different strategies from the CEOs before me,” she says. “It’s like ice skating, where you’re in the middle of a group of people and being whipped around.”

How ambitious is this split? Few in tech history have been attempted on this scale.   It’s tantamount to changing the engine on a car hurtling down a freeway without slowing down.

“It’s a huge undertaking filled with (IT systems and organizational) complexities,” says Bob Dutkowsky, CEO of Tech Data, a tech distributor that made 20% of its $28 billion in revenue last year from selling HP products. “The old HP got very, very big and moved slowly. Two companies make it more nimble, responsive, competitive and innovative.”

The newly constituted HP has the organizational chops to pull it off, Dutkowsky contends. He says Whitman and HP Inc. CEO Dion Weisler called him within minutes of announcing HP’s split, and quickly set up a program to smooth the business transition for Tech Data.

Corporate moves leading up to the split suggest the two companies are on the right path, says Crawford Del Prete, an analyst at research firm IDC. They got out of some companies, like computer-security firm Tipping Point, and bought companies in cloud services. “They’ve done a great job of reducing internal costs and dividing up (how they sell products),” he says.

“Now, the real work begins.”

JOB CUTS

A September bombshell announcement that the technology behemoth plans to slash up to 30,000 jobs — roughly 10% of its worldwide workforce — underscores wrenching changes and an uncertain future for the Silicon Valley company.

HP shares, meanwhile, have declined 24% over the past year, closing at $26.96 on Friday. Under the split, investors will be given both a stake in both HP Inc. (ticker symbol: HPQ) and Hewlett Packard Enterprises (HPE).

“We’re turning around an icon … that lost its way,” Whitman, 59, says. “We’re trying to set the company up for the next chapter by laying the pipes and remodeling the house.”

Home improvement analogies aside, the market has changed, and HP needs to change with it, Whitman says. It also needs to regain the HP Way, principles that defined the 76-year-old company as a beacon of innovation, community service and progressive workplace that drew the praise of Steve Jobs and others.

“I’m more convinced than a year ago, when I decided to split the company,” Whitman says.

DELL UPS THE STAKES

HP’s official reason to split is to streamline its business and create two smaller, simpler companies. Like fellow legacy tech giant IBM, HP has seen its sales sputter as the market for PCs decrease while new rivals such as Amazon dominate emerging enterprise technologies like cloud computing.

Dell’s proposed acquisition of data storage provider EMC for a record $67 billion boldly reflects the high stakes – and competition – HP faces in the battle for the $1 trillion IT market worldwide.

“There will be wide-reaching ramifications across the tech space for years to come from this transaction,” says Daniel Ives, an analyst at FBR Capital Markets & Co. “Michael Dell has built a tech behemoth that will aggressively go after the next-generation data center and cloud (computing) paradigm and pose a threat to traditional IT stalwarts.”

“Ultimately, we view this deal as a wake-up call to traditional IT stalwarts (such as HP, Oracle, Microsoft and IBM) that they must finally use their massive treasure chests to be more aggressive on M&A” Ives says.

It’s all a bit like politics – of which Whitman knows a thing or two from her run as the Republican candidate for California’s governor.

A political junkie, Whitman doesn’t support predecessor Fiorina in her bid for the Republican presidential nomination, but New Jersey Gov. Chris Christie, whom Whitman has known for years.

“We all have an obligation to get involved,” she says. “What’s important is to stand up and shape the direction of this country. I admire what he did in (predominately Democratic) New Jersey. We need Republicans and Democrats to work together.”

As for her own political aspirations? “No. That’s definitive,” Whitman says, without hesitation. “I learned a lesson. It was the experience of a lifetime.”

ACQUISITION HANGOVER

Whitman’s chore today is far from the state capitol. She’s overseeing the creation of two Fortune 50 companies, each saddled with some heavy recent history.

HP’s troubles long precede Whitman: It has spent $61.2 billion alone on eight big acquisitions since 1997, with mixed results.

Acquisitions of Electronic Data Systems ($13.9 billion, under then-CEO Mark Hurd in 2008), Palm ($1.2 billion, Hurd, 2010) and Autonomy ($10 billion, Leo Apotheker, 2011) put a further strain on HP’s operations, forcing massive write-offs and staff reductions.

The split, which HP estimates will cost it more than $2 billion, could undercut the synergy between the enterprise and PC operations in selling goods and services, according to an SEC filing by HP.

“It’s an entirely different situation from eBay, based on the type of company, size and market,” Whitman says. “eBay was on fire, creating a new industry. HP was a very proud, iconic company.”

She adds, “What is the same is winning the hearts and minds of employees, and setting the right priorities for innovation and financials.”

COFFEE WITH MEG

Most days are a blur for Whitman. She pings from one event to another: A business review of the PC or server unit for an hour, customer meetings, meetings with employees, a quick check of the financial performance for the quarter, a look at next-generation products. The meetings are anywhere from 15 minutes to two hours, and can be as varied as an equity road show for HPE with investors in New York or one-on-one meetings with investors in San Francisco, Los Angeles, London or Baltimore.

At HP headquarters here last week, HP provided rare access to a quarterly meeting, called Coffee with Meg (she drank tea), in which she huddled with other HP executives, members of Hewlett Packard Ventures and start-ups.

At an executive briefing room Thursday morning, they sat around a conference table and discussed packet-processing protocol technology, cloud-enabled mobile services, Internet-connected sensor systems, and supply-side security.

For 90 minutes, a laser-focused Whitman was attentive, laughed, joked with participants, and asked technical and marketing questions.

If only the historic split is so easy.

Follow USA TODAY San Francisco Bureau Chief Jon Swartz on Twitter: @jswartz.

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