*NEWS*HP:DIVISION OF PC & INK BUSINESS
*NEWS*HP:DIVISION OF PC & INK BUSINESS
2005-06-17 at 11:02:00 am #11569
Hewlett-Packard announced division of PC and printers business
Chief Executive of Hewlett-Packard, Mark Hurd announced the company’s decision to separate its personal computer and printer group into individual businesses The new HP Chief Executive Mark Hurd announced the company’s decision to separate
its personal-computer and printer units just five months after they had been combined, as a last realignment made by former CEO Carly Fiorina.
“Now, by managing PSG and IPG as separate, highly focused organizations, we can further sharpen our competitiveness and improve our cost structure,” stated Mark Hurd, referring to the Personal Systems Group and the Imaging and Printing Group, quoted by Mercury News.
Todd Bradley, former CEO of palmOne, will run the PC business while Vyomesh Joshi will head the imaging and printing business as executive vice president.
The new HP decision is meant to lower costs, with the new retain of its common supply chains, distribution and sales, preserving the common initiatives of the digital entertainment and the digital photography.
NEW CEO’S FIRST MAJOR MOVE UNDOES REALIGNMENT BY FIORINA
Hewlett-Packard on Monday separated its personal computer and printer group into stand-alone businesses, a move by new Chief Executive Mark Hurd to reverse one of Carly Fiorina’s last acts as CEO.
The Palo Alto company named R. Todd Bradley, former chief executive of palmOne, to head the PC business. Bradley, 46, had spent one year as palmOne’s chief executive and three years as its president, where he led a turnaround of the developer of the Treo handheld and other devices.
Vyomesh Joshi, 51, who was running the combined printer and PC business unit, will resume his former role as executive vice president of the imaging and printing business.
In January, a few weeks before she was ousted, then-CEO Carly Fiorina merged HP’s personal computer and printer businesses into a single division. At the time, HP said the move would make the company more efficient, enable it to develop new products faster and let it bundle printers and PCs more easily.
HP’s printing division is its most profitable business, but it has been under attack by rivals and has recently lost market share. The PC business, however, had been losing money for several quarters. But in the past few quarters it has turned around.
Lower costs cited
In a U-turn Monday, HP said that by operating the two businesses separately, it can lower costs.
“Now, by managing PSG and IPG as separate, highly focused organizations, we can further sharpen our competitiveness and improve our cost structure,” Hurd said in a statement, referring to the Personal Systems Group and the Imaging and Printing Group.
The move is the first major corporate change Hurd has made since he was named chief executive of HP in late March. Last week, Hurd named Cathy Lyons, an HP veteran and senior vice president in the printing business, executive vice president and chief marketing officer.
Rob Enderle, principal analyst with the Enderle Group, said the two businesses were merged by Fiorina as a way to placate the board, which wanted her to share more responsibilities.
“The decision was to create a level of synergy between the two organizations and it was to appease the board,” Enderle said. “It raised VJ up to a senior position. . . . But it neither appeased the board, nor did it create the synergies she was looking for.”
Monday’s news may put to rest for now speculation on Wall Street over whether Hurd will spin off any of HP’s businesses. In the past year or so, some analysts have been calling for HP to spin off the highly profitable printer business, a move that the HP board has considered a few times. In the past week, rumors have been bandied about that HP may sell its PC business to Acer of Taiwan.
“We have no plans at this time to spin off anything within the company,” HP spokesman Mike Moeller said.
“They wouldn’t hire this guy if they were selling the unit,” said Mark Stahlman, an analyst at Caris & Co., referring to Bradley, the new head of HP’s personal computer business. “The problem is that many people have been looking at HP as a source of banking transaction fees, as opposed to a business that is trying to target some important growth opportunities.”
Moeller said HP will retain its common supply chains, common distribution and retail presence, work that was done before the two units combined.
“We are not going to reinvent the wheel,” Moeller said. He said the two businesses will continue to work closely together on common initiatives, such as digital photography and digital entertainment.
The two business units may have been merged on paper, but they each continued to report their financials separately, under the umbrella of the combined imaging and personal systems group. The businesses also kept their separate locations. Printing and imaging is based in San Diego, with key development in Boise, Idaho, and Corvallis, Ore. The PC business is split between Houston and Cupertino.
HP announced the change after the stock market closed. On Monday, HP’s shares closed at $23.89, up 47 cents. Its shares were unchanged in after-hours trading.