Hewlett-Packard Merges Printing and PC Units

News emerged on Wednesday that Hewlett-Packard

would be merging its Imaging and Printing Group (

) and its Personal Systems Group (PSG), in an concerted effort to drive profitable growth for the whole company. According to

though, analysts are questioning whether this reorganization will really cut costs a significant amount. The new unit containing both IPG and PSG will imaginatively be called the Printing and Personal Systems Group, and it will be headed by Todd Bradley, executive vice president of PSG since 2005. HPQ believes that, by merging the two units it will streamline the supply chain and cut costs, and then be better prepared to reinvest in the business. CEO Meg Whitman said, “This combination will bring together two businesses where HP has established global leadership. By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.” However, many analysts are skeptical that the restructuring will significantly impact the business and save any real money. "I don't see anything in today's announcement that will change the fact that HP is less than the sum of their parts," said Garner Distinguished Analyst Mark Fabbi to PC World. “Moving the deck chairs around isn't enough.” On Wednesday morning, J.P. Morgan released a research report saying that Underweight-rated HP announced an organization realignment that included the combination of the PC and Printing business units into one entity. It said that it believes there is no reason to get excited, as this is not a new move for the company. Prior CEOs Carly Fiorina and Mark Hurd undertook or contemplated similar measures in the past with limited success. “With company reorganizations, there is the possibility that the company could be cleaning up the businesses ahead of a potential spin-off or divesture of the assets; such a situation could apply in this case, in our view. Such a move could provide a source of funds for HP to invest in its software and services platforms. While it is good to see HP rolling up its sleeves, we think investors may have been better served by a sale of the PC/printing businesses now versus down the road.” Sterne Agee reported that, while it believes there is room for cost synergies, it is not sure of the strategic benefits as it believes each has a unique business model. “With a potential combination between its PC (30% of revenue) and printer (21%) business units, we believe there is room to cut costs, particularly with general & administrative and potentially with sales & marketing.”