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 user 2008-06-19 at 11:34:17 am Views: 60
  • #20092

    HP plans overhaul of lucrative printer division
    detailing how it will restructure the unit, based largely in the
    Northwest, the company hopes to cut costs and develop new markets

    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.