HP Throws a Hail Mary, Combines Two Dying Business to Revive Both
By on March 20th, 2012

HP, the personal computing giant of yesteryear, which has seen sales of its PCs decline over the last couple of years, is planning to restructure its business in order to make it more cost efficient and reduce costs, according to a report by AllThingsD.

It will be moving its Imaging and Printing Group (Printers) under its Personal Systems Group (Personal Computers), with the new larger division reporting to a single head.

HP’s printer business was one of its most profitable ones, but had seen sales decline over the last couple of quarters. Its PC business has also not been doing very well, as worldwide desktops sales have slowed down and are expected to decline going forward. Both businesses combined added up to more than 50% of HP’s total revenues in 2011.

HP was planning to spin off the PC division or sell it to someone like IBM under its previous CEO Apotheker’s management, but the new CEO, Meg Whitman scrapped that plan.

HP’s printer business has much higher operating margins than its PC business, but given the product synergies and the overlapping target customer base, it may actually be a good call on its part to combine the two to cut costs, improve margins and maybe improve sales.

The future of HP’s PC business depends on how well it capitalizes on the ultrabook and tablet trend, following the launch of Windows 8 in late 2012.

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Author: Pathik Google Profile for Pathik
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Pathik has written and can be contacted at pathik@techie-buzz.com.

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