HPs Crown Jewel Division Left in the Lurch

Last month it appeared as if Hewlett-Packard Co. had officially tabled the prospect of spinning off its lucrative printing business with its move to combine its printing and PC units into one group, now called the Imaging and Personal Systems Group, or IPSG.

But with Carly Fiorinas departure this week, the future of the printing business is once more up in the air.

Analysts say the move will likely have little immediate effect on the companys printing business, unless it distracts the company and IPSG head Vyomesh Joshi from seamlessly consolidating PCs and imaging. If HP displays weakness during this stretch, Dell Inc. and the other companies vying for a piece of HPs large installed base of printing customers will come in for the kill.

/zimages/2/28571.gifHPs Cathy Lyons talks up the merger of the two units.Click hereto read her interview with eWEEK.

“The only near-time impact this type of thing has is whether it distracts the company, the people focused on bringing products to market; if they get distracted—as well as partners like the channel—it opens the door for competition,” said Angele Boyd, vice president of image capture and output research at IDC, in Framingham-Mass. “VJ has enough on his plate trying to figure out how to optimize synergies with PCs and printing, and now his boss has changed—thats going to be a challenge.”

Other insiders agreed. “For successful consolidation of the two groups in the next few months, HP may not have the leadership needed to push through the barriers,” said Ian Hamilton, printer industry analyst with Current Analysis Inc., in San Diego. “HPs competitors smell blood.”

The bigger question though, say analysts, is what will happen if HPs new CEO fails to quickly execute on the companys strategies, which HP claims was Fiorinas downfall. In that case, the company could be forced to make radical moves that could affect the printing division, they say.

“In the long term, depending on who that CEO is and what he or she and the board decide as a whole, then two, three, four, five years down the road, all bets are off,” said Boyd.

/zimages/2/28571.gifHP needs an outsider at the helm, claims David Coursey.Click hereto read why.

“As far as the printer business, it inevitably will mean changes,” said Marco Boer, senior analyst and consultant, with digital printing research firm IT Strategies, in Hanover, Mass. “Whoever is going to become the next CEO, I dont think will leave things the way they are. The problem now is what happens to the business structure, now that PCs are part of that unit. The next CEO will likely have a very definitive opinion.”

As for who this CEO will be, there was some speculation that Joshi could lead up the new company, but most industry insiders predict that the new chief will come from outside HP. Some even speculated that HP might look inside Dell for a leader, to take out two birds with one stone.

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