HP to Combine PC, Printer Units
Hewlett-Packard Co. announced Friday that it would combine its personal-computer and printer units, helping end speculation that the technology giant would follow competitors in spinning off divisions.
The move aims to strengthen the company’s market position and get new products out faster, the company said.
In December, Hewlett-Packard Chairwoman and Chief Executive Carly Fiorina said the company’s board had three times considered breaking up the technology giant but decided that its diversified portfolio of printers, computers, digital cameras, servers and information technology services helped it weather fluctuations in the cyclical technology sector.
Company executives said the combined unit would be headed by Vyomesh Joshi, who previously led the printing division. Duane Zitzner, head of the PC unit, left the company.
Joshi, credited with accelerating earnings at Hewlett-Packard’s printer unit in the last three years, will assume control of a PC business whose profit margins have shrunk to less than 1% of sales. Zitzner, 57, retired after 15 years, the Palo Alto-based company said in a statement.
Under Zitzner, the PC unit missed a goal set by Fiorina in June 2002 to more than triple profit margins by the end of 2004. The PC business ranks second to Dell Inc. after losing the No. 1 spot in 2003.
Although each business had about $24 billion in revenue in fiscal 2004, the printer unit made $3.85 billion in profit and the PC business made $210 million.
“HP has been challenged in the PC division, and [Joshi] has had a string of successes,” said Chuck Jones, who helps manage $15 billion including Hewlett-Packard shares at Stein Roe Investment Counsel in San Francisco. “He might be able to see some additional ways to leverage the PC business through the printer division.”
The printer group is Hewlett-Packard’s most profitable unit, with a margin of 16% in fiscal 2004 ended Oct. 31. Joshi had promised to deliver 13%. Fiorina in 2002 said profit at the PC unit could reach 4% of sales in 2004.
Hewlett-Packard shares rose 12 cents to $20.07 on the New York Stock Exchange.
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Bloomberg News and Associated Press were used in compiling this report.
