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 user 2010-01-04 at 11:12:22 am Views: 59
  • #23238


    Hewlett-Packard Says Printing Market Is ‘Healthy’
     Hewlett-Packard Co. Executive Vice President Vyomesh Joshi
    said the printing market is “healthy” and poised for a recovery in 2010
    after customers held off buying new devices this year.“2009 was a
    difficult year for printing hardware,” Joshi, who has led the Imaging
    and Printing Group for nine years, said last week in an interview. “But
    supplies sales were fine. What that means is that printing is healthy –
    even with economic pressure, customers are still printing the content.”

    the world’s largest maker of printers, has posted five quarters of
    declining sales in one of its most profitable businesses. Joshi, 55,
    said he plans to win market share from competitors, including Lexmark
    International Inc. and Eastman Kodak Co., while trimming costs. Those
    efforts are aimed at helping Joshi achieve the 15 percent to 17 percent
    profit margins he’s on the line to deliver to investors in 2010.Chief
    Executive Officer Mark Hurd said last month the printing unit is
    “poised for recovery and getting on the attack.” The company is
    forecasting “double-digit” growth in printer shipments this quarter,
    compared with the 20-percent drop in the three months ended in October.In
    September, the company forecast 2010 revenue at the unit will be
    unchanged or rise 2 percent. That’s the lowest sales- growth forecast
    among Hewlett-Packard’s businesses, which include personal computers and
    a unit that sells servers, storage devices, software and services.The
    printing group accounted for 21 percent of Hewlett- Packard’s $114.6
    billion revenue last year and 32 percent of its $13.4 billion profit.

    The printing unit’s cost-cutting campaign began with an
    August 2008 reorganization that reduced the number of groups in the
    division to three from five, with some jobs eliminated as part of what
    Joshi called “streamlining.”He also cut the number of laser and
    inkjet printer models, which has saved on manufacturing, marketing and
    sales costs, and shifted some customer-service and support functions to
    the Web.The company focused on inventory during the economic
    slump, working to reduce supply — and preserve cash — as demand fell.
    Its inventory management was so aggressive, said Joshi, that the company
    had shortages of laser printers late in the year after orders picked up
    sooner than it expected.To pare supply-chain costs,
    Hewlett-Packard began shipping printers directly from its Asian
    factories to some distributors and retailers, as opposed to its own
    distribution centers. Joshi wouldn’t detail the amount of the savings,
    except to say they are significant.

    No Price Cuts
    overall has a $60 billion supply chain. We have a fair share of that,”
    he said. “When you have those kind of numbers, even a small percent of
    those numbers are a big number.”Joshi said Hewlett-Packard will
    gain market share by winning customers with products and new
    technologies rather than by cutting prices, a move that would weigh on
    margins.“We don’t need to cut prices,” he said. “In the market
    right now, our product, compared with any of our competition, is much
    better in terms of the innovation, in terms of ease of use, in terms of
    quality, in terms of connectivity. That’s what the customer will be
    looking at.”Lexmark’s laser and inkjet printers are innovative
    and the company is winning orders around the world, said Jerry Grasso, a
    spokesman for the Lexington, Kentucky-based company. Kodak is making
    “significant” inroads with its printing business, and sales of its
    inkjet systems are “significantly” outpacing the industry, spokesman
    David Lanzillo said.

    Struggling Rivals
    Hewlett-Packard, based
    in Palo, Alto, California, rose 47 cents to $52.46 at 4 p.m. on the New
    York Stock Exchange. The stock has advanced 45 percent this year, making
    it the fifth best performer on the Dow Jones Industrial Average.Hewlett-Packard
    has an advantage that some of its rivals don’t have — it is profitable
    and not dependent on printers for the majority of its revenue, said
    Shaw Wu, an analyst with Kaufman Bros. in San Francisco.Lexmark,
    the No. 2 U.S. printer maker, and Kodak, a 129- year-old photography
    company that is working to build up its printer business, are both
    struggling, Wu said.“Those are the competitors you like,” said
    Wu, who has rated Hewlett-Packard shares as a “buy” throughout 2009.
    “They don’t have the resources to fund a price war.”

    Joshi, a native of Ahmadabad, India, joined
    Hewlett-Packard in 1980 as a research and development engineer. He was
    promoted to run the printing unit by former CEO Carly Fiorina in 2001.
    Under his tenure, IPG has grown to $24 billion in sales from $19
    billion, with profit more than doubling to $4.3 billion.

    the Wall Street Journal reported in September that the company was
    considering replacing Joshi and combining the printer and PC units under
    Todd Bradley, who has led the turnaround of Hewlett-Packard’s PC unit
    in the past five years.

    Joshi said the company doesn’t comment on
    “What I can tell you is that the printing and imaging
    business is a great business with great opportunities,” said Joshi, the
    longest-serving employee currently on Hurd’s executive team. “I want to
    make sure the transformational work I’ve started — I want to see that
    all the way to the end.”