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 user 2008-06-19 at 11:33:14 am Views: 68
  • #20225

    HP plans overhaul of lucrative printer division
    Without detailing how it will restructure the unit, based largely in the Northwest, the company hopes to cut costs and develop new markets
    Thursday, June 2008 Hewlett-Packard Co. said Wednesday that it plans to overhaul its hugely profitable printer division, cutting costs as it pursues new markets. The company declined to detail how its changes would affect jobs in the printer group, which is the focal point of HP’s substantial operations in the Northwest.”We’re going to rebalance the work force as necessary to match the new structure,” Ryan Donovan, an HP spokesman, said at the company’s headquarters in Palo Alto, Calif.Printers, scanners and related products produced one-quarter of HP’s $104 billion in revenues last year, and nearly half of its $9.6 billion operating profit. The company invented its inkjet technology in Corvallis, and printers have remained the focus of operations there and at campuses in Vancouver and Boise.

    HP employees in the Northwest have been anticipating job cuts for several weeks after the company told Corvallis workers it planned to shift some Oregon manufacturing overseas and make other changes. It’s not clear whether Wednesday’s shake-up is related to those earlier initiatives.HP has an estimated 3,500 employees in Idaho, 2,500 in Corvallis and as many as 1,800 in Vancouver.The printer group’s new structure is designed to focus HP on what the company calls “Print 2.0. ” The initiative is a bid to make printing more efficient and to expand HP beyond its core inkjet, laser printer and scanner businesses, which are becoming more competitive and less profitable as those products mature. Xerox, Lexmark and other companies compete with HP in various parts of the printer business.In particular, HP hopes to provide tools for corporate customers to measure their printing costs and productivity. It also plans to enter new markets in large-format, commercial printing, and on smaller surfaces such as pills.After the restructuring, HP said its printer groups will be divided into three markets: Consumers, corporations and print services.The consumer group will be led by Steve Nigro, HP’s senior executive in Corvallis. It will focus on inkjet hardware, retail publishing and ink supplies, among other products.Amid HP’s pursuit of new printer markets, Pacific Crest Securities analyst Brent Bracelin said the company’s cost-cutting plans puzzle him.”Given that it’s the most profitable division, I can’t imagine there’s a lot of fat to cut,” he said.

    HP chief executive Mark Hurd has already cut costs in other HP divisions, helping pull those groups out of the red and substantially improving the company’s overall profitability. Bracelin said he suspects that Hurd’s focus is now turning to printers.”The microscope is now being applied to the printer business,” he said. “I think that’s the new way of competing in what’s increasingly a global economy.”Donovan, the HP spokesman, said that by becoming more efficient the company plans to save money to invest in new areas.”Just because you cut costs in a growth market doesn’t mean you can’t pursue that market,” Donovan said.