HP to combine its PC and printing units in a bid to boost profit
Hewlett-Packard Co. will combine its personal computer and printing units into one business as the tech giant looks for ways to increase profit.
The new Printing and Personal Systems Group will be led by Todd Bradley, who has been executive vice president of the company’s Personal Systems Group since 2005, the company said Wednesday. As expected, Vyomesh Joshi, executive vice president of the Imaging and Printing Group, will retire after 31 years at the Palo Alto company.
HP said combining the two units would improve its market strategy, branding, supply chain and customer support. The realignment is also expected to provide cost savings and drive profit, fueling speculation among analysts that job cuts could follow.
It’s the latest move for Chief Executive Meg Whitman, who took over the top job six months ago. Since then, she has announced several changes to help turn around the company, the most high-profile being her decisions to keep its PC business instead of possibly spinning it off and to make its WebOS operating system available to the open-source community.
Whitman said the combined printing and PC group was a “winning scenario for customers, partners and shareholders.”
“This combination will bring together two businesses where HP has established global leadership,” she said in a statement.
But analysts were less optimistic.
“We believe there is no reason to get excited, as this is not a new move for the company,” analyst Mark Moskowitz of JPMorgan wrote in a note to investors. “Prior CEOs Carly Fiorina and Mark Hurd undertook or contemplated similar measures in the past with limited success.... While it is good to see HP rolling up its sleeves, we think investors may have been better served by a sale of the PC/printing businesses now versus down the road.”
Moskowitz said the move signaled the possibility that the company could be “cleaning up the businesses” ahead of a potential spinoff, which would provide a source of funds for HP to invest in its software and services platforms.
Barclays Capital analyst Ben A. Reitzes said in an investor note that “the combination may provide some cost-saving opportunities, but would seem to come along with some execution risk.”
Shares of HP fell 52 cents, or 2.2%, to $23.46 on Wednesday.
In addition to combining its PC and printing business, HP is streamlining other business functions, including marketing and communications. It has also moved its Global Accounts Sales Group to the newly named Enterprise Group, which oversees enterprise servers, storage, networking and technology services.
“Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” Whitman said. “The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends.”
