HP said it is combining printing and imaging with the Personal Systems Group (PSG) to accelerate profitable growth, leverage the power of its portfolio and strengthen its market position.
The newly formed Personal Systems Group (IPSG) will be headed by 24-year HP veteran Vyomesh Joshi, who has spent the last three years as imaging and printing’s executive vice president. Duane Zitner, Personal Systems Group’s executive vice president, is retiring following 15 years with HP, the company said.
Both imaging and printing and PSG were created in October 2003.
HP’s decision comes as OEMs search for increasingly creative business solutions to help overcome growth and profitability problems in the PC sector, while Gartner has predicted a wave of consolidation in the PC sector during the next three years.
Gartner said last month that challenging market conditions would half sales growth and revenue between 2006 and 2008 compared to 2003 and 2005. The analyst noted the PC businesses at both HP and IBM Corp were vulnerable to being spun out, if their drag on corporate margins and profitability was considered to great by their parents.
IBM subsequently acted, selling its own PC business to Chinese manufacturer Lenovo Group Ltd for $1.7bn, while taking an 18.9% stake in Lenovo.
HP’s own PC business has seen poor performance in comparison to imaging and printing, while Zitner’s departure follows a cull of executives last summer in the wake of declining quarterly server and storage sales. During the company’s recent fourth quarter, PSG PC sales grew 12% overall and, despite $6.5bn in sales, booked an operating profit of just $78m the group’s best performance since 2000.
Printing and imaging, where HP makes most of its money, recorded $6.5bn sales with $1.1bn operating profit. Ironically, Merrill Lynch analyst Steve Milunovich last June advised HP to spin off printing and imaging in order to remain profitable and compete against Dell Corp.
