Whitman outlines HP restructuring plan for PC, printer units

ByABC News
March 21, 2012, 8:55 PM

— -- Hewlett-Packard confirmed Wednesday that it is undertaking a massive corporate overhaul to meld two of its biggest divisions in a gambit to turn around its flagging fortunes.

The reorganization — one of the biggest in the 73-year history of HP — combines the personal computer and printer groups to consolidate global sales, marketing and communications.

"The result will be a faster, more streamlined, performance-driven HP," CEO Meg Whitman said in a statement. Whitman, who took over in September after the brief tenure of Leo Apotheker, is seeking to optimize operations and use the savings to reinvest in research and development.

The brief announcement did not mention layoffs, but industry analysts expect significant job cuts. An HP spokeswoman declined to comment.

PC chief Todd Bradley, widely credited with helping build HP into the world's No. 1 PC seller, will be in charge of the combined group. Vyomesh Joshi, who ran HP's printer business, is leaving.

HP has faced wrenching choices for its printer and PC groups, whose growth has tapered. Printers and PCs accounted for $15 billion in revenue for HP last quarter, or about half its total sales. Yet both divisions have struggled because consumers have embraced smartphones and tablets, which are widely used to view photos. Meanwhile, HP has expanded into data center hardware, software and services.

HP has fretted over what to do with both divisions. Apotheker proposed getting out of the PC business entirely and emphasize more profitable businesses, including commercial software and cloud computing.

Whitman scotched that idea, but she has said HP will continue to expand its software and services businesses.

Reaction to HP's plan was mixed on Wall Street Wednesday: Shares dipped 2.2% to $23.46.

"HP's move doesn't answer the No. 1 question for its PC division: How does it compete with Apple?" says Patrick Moorhead, a former Compaq Computer executive who is president of Moor Insights & Strategy. "This gears (HP) to be an enterprise company like IBM, but I'm not sure how that helps them compete with Apple."