HP Fuses PCs, Printers Into One Unit in Wide, Strategic Restructuring

Todd Bradley to head new $65 billion Printing and Personal Systems Group, company veteran Vyomesh Joshi to depart.

Hewlett-Packard Co. said today that it will merge its Imaging and Printing Group (IPG), a unit chief executive Meg Whitman last month called the company’s “lifeblood,” and its Personal Systems Group (PSG), under one umbrella headed by Todd Bradley, PSG’s long-standing executive vice president.

The reorganization creates the Printing and Personal Systems Group with combined revenue of some $65 billion—more than half of HP’s companywide sales based on 2011 figures--and exceeding that of HP’s Technology Services and Enterprise Business units, taken together.

Since ascending to HP’s helm some seven months ago, Whitman has refrained from making sweeping changes although she recently suggested that modifications to make the company more cost-efficient, profitable and responsive to customers were on the horizon.

In recent quarters, PSG’s and IPG’s revenues have slowed noticeably. For Q1 2012, ended January 31, PSG’s sales slid 15 percent and unit shipments fell 18 percent while IPG’s revenue fell 7 percent and printer units shipped dropped 15 percent when compared to the same period last year.

Combining the two groups aims to cut costs, streamline operations, improve profits and gains HP sales a united front from which to pitch printing and PC-related solutions to customers, said Whitman.

“This combination will bring together two businesses where HP has established global leadership,” she said, in a statement. “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.”

Charles King, principal analyst at Pund-IT Inc., said that the “natural synergies between the two groups’ efforts, both in consumer and corporate markets, should help HP to capture improved efficiencies and also allow it to use IPG’s healthy profits to bolster PC and laptop margins.”

However, King cautioned that tightened budgets and layoffs, typically associated with streamlining measures--and thus far not detailed by HP--may still be in the company’s future plans.

With the reorganization, Vyomesh Joshi, HP IPG vice president, departs the company after a 31-year tenure. He is credited with growing IPG’s revenue from $19 billion to $26 billion and doubling operating profit to some $4 billion during his 10 years running the unit.

“Under his leadership, IPG accelerated innovation and pioneered solutions that transformed the printing market,” said Whitman.

Restructuring also hits global sales, marketing and communications.

HP said that Global Accounts Sales will be folded into the newly named Enterprise Group—which now also houses enterprise servers, storage, networking and Technology Services--headed by Dave Donatelli, the unit’s executive vice president and general manager. Jan Zadak, Global Sales executive vice president, will be reassigned, HP said.

In addition, Marty Homlish, HP executive vice president and chief marketing officer, will take control of the company’s marketing, the goal of which is to unify branding and marketing across all of the vendor’s business units, officials said.

In a similar move, the vendor placed worldwide communications under Henry Gomez, who three months ago Whitman appointed chief communications officer and executive vice president, and now is tasked with unifying the company’s messaging.

“If any executive came out a clear winner from this realignment it’s most likely EVP Dave
Donatelli, who now holds the reins in HP’s new Enterprise Group,” said King. “Not only does this organization contain the lion’s share of the company’s most profitable businesses, it also constitutes the enterprise IT-centric future of HP,” he said.

Since announcing last summer--and subsequently renouncing--plans to sell or spin off its PC unit, HP has struggled to find a solution to address increased competition, technology shifts towards tablets and smartphones and sliding margins that impede PC sales growth.

“Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” said Whitman.

“The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends,” she said.

Whitman is slated to address HP shareholders today at the company’s 2012 annual stockholders meeting.

TAGS: PC,HP,printers,reorganization,Meg Whitman



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