HP to combine its PC, Printer divisions – sources

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A worker enters HP headquarters. Anonymous sources said the firm intends to combine both its personal computers and printers divisions. Photo - AP

Hewlett Packard’s top management has announced plans to merge the PC and printing division as part of a major overhaul to spur consumer hardware sales.

The source, on condition of anonymity, revealed that Vyomesh Joshi, long term chief of printing division, will step down to make way for Executive Vice President Todd Bradley to lead the combined business unit.

HP CEO Meg Whitman is seeking a reorganisation of the two divisions so they can better interact with customers and how its employees can combine their best.

HP last year considered a proposal to either sell or spin off its PC arm, which is known as Personal System Group. That emerged as the company announced it would get out of the tablet making business after its TouchPad’s failure.

The company sees its Imaging Printing Group (IPG) that sells printers to both consumers and business, and PSG selling computers to both consumers and business, as making more operational sense combined than apart.

HP, the biggest US technology company, is presently suffering from declining revenues with its core personal computer business in the red. Sales of the company’s mobile devices, tablets and smartphones have also taken a hit as the company flirted with different ideas under former CEO Leo Apotheker’s reign.

Mixed Reactions

Analysts are giving mixed reactions after the company’s announcement of combining both its divisions. Many industry critics say Whitman is moving at an impressive speed to fix the company’s issues and jump start growth but it is premature to predict the advantages of the integration.

“It’s too early to tell what this is going to do. The risk I think is that both (divisions) have very different business models,” Shaw Wu, analyst at Sterne Agee said.

ISI group analyst Brian Marshall added: “Meg Whiteman is moving quickly to institute changes, e.g., fewer silos, greater emphasis on R&D, more conservative expectations. Last week we met with the head of HP Labs and were impressed with the new organisational focus/direction out in place by CEO Whiteman.”

Presently, HP is still leading worldwide PC sales. However, the growth of the division is diminishing as mobile phones usage takes off across the globe.

Both IPG and PSG accounted for $65 billion in sales in 2011, forming more than 51% of HP’s overall sales. Combined profit of both divisions was $6.3 billion. The latest announcement from the management forced its shares slide to 1.2% to $24.04 in the afternoon trade.

Sources: Reuters, allthingsd.com

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