HP's Division Consolidation Opens It to Cost Savings, Spinoffs
Hewlett-Packard's consolidating its printing and personal computer divisions could save it some cash, or set it up for something radical like a spinoff or two.Hewlett-Packards decision to consolidate its printing and personal computer divisions under veteran manager Todd Bradley is possibly the beginning of some very big things, according to analysts. At the very least, the move will offer HP some bottom-line savings; it could also set the company up for a more radical move, such as spinning off a division into a whole new entity. At the same time it consolidated those divisions, HP also engaged in some other corporate streamlining: its Global Accounts Sales organization joins the newly created HP Enterprise Group, headed by David Donatelli, and its overall marketing functions will be unified across business units. Its Global Real Estate function will also be consolidated into Global Technology and Business Processes. Its a lot of movement, altogether, and suggests that relatively new CEO Meg Whitman has been planning some big moves for some time.
According to analyst Jack Gold, in a March 21 research note, both HPs Personal Systems Group (PSG) and Imaging and Printing Group (IPG) have been relatively underperforming in terms of margins and profitability. Both have exhibited a downward revenue trend over the past several quarters reflecting market realities, he wrote, which will not likely have any dramatic upticks in the short term, especially given HPs failure to effectively cash in on the big trends in mobility.