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HP confirms merger of PC, printer businesses

HP will merge its printer division into its PC business to cut costs

By Marc Ferranti and James Niccolai
March 21, 2012 10:21 AM ET

IDG News Service - Hewlett-Packard today announced the merger of its Imaging and Printing Group (IPG) and its Personal Systems Group (PSG) in what it called an effort to drive profitable growth for the entire company.

The two businesses will be combined into a new unit called the Printing and Personal Systems Group, headed by Todd Bradley, the executive vice president of PSG since 2005.

The move, widely rumored earlier in the week, reflects the dimming future of the printer business relative to the PC business. While printer sales are expected to grow 1% to 2% in the next few years, the PC market will expand by about 5%, according to IDC.

HP said that by merging the PC and printer units, it will streamline its supply chain, achieve cost savings will be better able to reinvest in the business.

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

Among other restructuring moves announced Wednesday, HP will merge the Global Accounts Sales organization with the rechristened HP Enterprise Group, headed up by David Donatelli. The business includes enterprise servers, storage, networking and technology services.

Under the plan, Vyomesh "VJ" Joshi, who has run HP's print business for the last 20 years, will step down, and Bradley, head of the PC group, will run the combined division.

HP has yet to confirm the move, though it has not denied it either. The Wall Street Journal, citing unnamed sources, said the change would be announced Tuesday. Reuters also reported that a move was imminent. If the announcement is made, it's likely to come before HP's annual shareholder meeting on Wednesday afternoon.

The move would reflect two realities, industry analysts said: That the market for printers and printer ink, long the backbone of HP's business, has a dwindling future, and that HP needs to cut costs somewhere in order to boost spending on research and bring innovation back to the company.

It wouldn't be the first time HP has merged its printer and PC groups. Carly Fiorina did that in 2005, just before the end of her tenure as CEO, but Mark Hurd reversed the decision soon after he replaced her. Hurd reportedly revisited the idea a few years ago but decided against it.

This time it's different, however. When Fiorina made the move, she put the combined division under Joshi. This time, the man who has driven a good part of HP's profits for more than a decade will leave the company, and the head of the PC division will be put in charge.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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