PALO ALTO, Calif. — In an attempt to recharge its growth, Hewlett-Packard Co., one of Silicon Valley's first and most fabled technology companies, said Tuesday it would split into two independent companies: its original measurement business; and the computer and peripherals and imaging businesses. The latter now makes up about 86 percent of HP.

The HP board of directors approved the realignment plan at a special meeting this morning (March 2). Under the plan, HP stockholders will hold shares in each company.

Lewis Platt, chairman and chief executive officer of HP (Palo Alto, Calif.), said he will oversee the process of splitting the company and will help select a new chief executive for the computer and printer operation. HP did not say whether Platt will remain as chairman.

Edward W. (Ned) Barnholt, executive vice president and general manager of the measurement organization, will become the chief executive officer of the new measurement company, which has no name at the moment; however, to keep the HP connection and heritage, Barnholt said the new name "could be something like Hewlett-Packard Technologies."

To keep its hard-won brand recognition, the new computing and imaging company will continue to operate under the Hewlett-Packard name and will include all of the enterprise computing systems, software and services, personal computer, and printing and imaging products. HP said that the company would be able to operate more autonomously and adapt more quickly to changing market needs.

The new measurement company — which will focus on high-growth sectors such as communications and life sciences — will include the test and measurement, components, chemical analysis and medical businesses, which together provided $7.6 billion, or 16 percent, of HP's total revenue of $47.1 billion last year.

HP Laboratories, the source of many of the company's technology breakthroughs over the decades, also will be split. "A significant portion will be moved to our new company," Barnholt said.

HP said it would consider holding an initial public offering for 15 percent of the measurement company later this year, which would consistute the largest technology IPO in Silicon Valley history, the company said. Subsequent to the IPO, HP expects to distribute the remaining shares to its stockholders in a tax-free transaction.

"We'll probably do an IPO in the fourth quarter of this year, a two-step spin in which we first seek new investors prior to the split of the current HP stock," Barnholt said.

The company said there would be no significant layoffs as a result of the split.

"These new companies will be financially strong and independently managed, each with its own board of directors and its own central research-and-development organization," Platt said. "Both companies will be able to better focus on growth in their individual markets. They will be well-positioned to build value for their stockholders, customers and employees."

"We now can get the visibility we deserve," Barnholt said, "and put measurement back in the front spotlight. We can focus, respond faster to changes in the market, and more aggressively grow our business, and in new ways. We can be diversified. The instrument, medical and chemical analysis systems all have similar business models."

However, Barnholt also said that he expects to be a major reseller of HP's computers, "and Sun's or others', if that's what it takes to compete."

"We also will look at acquisitions and divestitures, if necessary," he added, "but we have made no decisions, as yet. We're recreating the seedcorn to grow another $20 to $40 billion company. The Hewlett and Packard families are quite excited."

According to Galen Wampler, president of Prime Data (Morgan Hill, Calif.), a research firm, "no instrument company has survived the ownership of a larger corporation in which the board had more important things on its mind. Remember Fairchild and Monsanto? What HP is doing is better than selling off the test operation."

HP got its start 31 years ago and, over the years, blossomed into the world's largest test and measurement company. A test catalog containing over 10,000 different products, revenues of close to $4 billion, and a worldwide service and marketing juggernaut keep the company far ahead of its competitors.

Still, only 8 percent of the company's $47 billion in revenues stem from instrumentation; 86 percent comes from computers, peripherals (HP dominates the color printer market) and computer-related products, and the remainder from components, medical instrumentation and other products.

Lately, however, HP's legendary growth has been severely arrested: test revenues are down 14 percent from a year ago, PC profitability has suffered because of declining prices, and Unix server sales and market share are off. Those problems have been reflected in share valuations that have lagged far behind those of the Standard & Poor's 500 and other computer-based stock indices.

"Test is down because of the Asian crisis," Wampler said, "but that should bounce back. Barnholt's challenge is to find high-growth opportunities, not just communications, and to figure out which of the product lines are baggage."