Hewlett-Packard to combine PC, printing businesses

Posted March 21, 2012, at 6:21 p.m.

LOS ANGELES —Hewlett-Packard Co. will combine its personal computer and printing units into one business as the tech giant looks to improve its performance.

The new Printing and Personal Systems Group will be led by Todd Bradley, who has been executive vice president of the company’s PC business since 2005, the company said Wednesday. As expected, Vyomesh Joshi, executive vice president of the Imaging and Printing Group, will retire after 31 years at the Palo Alto, Calif., company.

HP said combining the two units would improve its market strategy, branding, supply chain and customer support. The realignment is also expected to provide cost savings and drive profits, fueling speculation among analysts that job cuts could follow.

It’s the latest move for Chief Executive Meg Whitman, who took over the top job six months ago. Since then, she has announced several changes to help turn around the company, the most high-profile being her decisions to keep the PC business instead of spinning it off and to make its WebOS available to the open-source community.

Whitman said the combined printing and PC group was a “winning scenario for customers, partners and shareholders.”

“This combination will bring together two businesses where HP has established global leadership,” she said in a statement.

But analysts were less optimistic.

“We believe there is no reason to get excited, as this is not a new move for the company,” analyst Mark Moskowitz of JPMorgan wrote in a note to investors. “Prior CEOs Carly Fiorina and Mark Hurd undertook or contemplated similar measures in the past with limited success. … While it is good to see HP rolling up its sleeves, we think investors may have been better served by a sale of the PC/printing businesses now versus down the road.”

Moskowitz said the move signaled the possibility that the company could be “cleaning up the businesses” ahead of a potential spin-off, which would provide a source of funds for HP to invest in its software and services platforms.

“At first blush, we are concerned that one of the reasons for combining IPG and PSG is a reaction to ongoing secular issues in both divisions, which are not going away soon,” said Barclays Capital analyst Ben A. Reitzes in an investor note. “The combination may provide some cost-saving opportunities, but would seem to come along with some execution risk.”

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