Hewlett Packard (HPQ) To Merge Printer And PC Business

Hewlett Packard (HPQ) To Merge Printer And PC Business

Hewlett Packard (NASDAQ:HPQ) announced plans today that will see its PC arm merged with its printer division. The strategic move will combine the divisions known as Personal Systems Group and the Imaging and Printing Group into a new behemoth division. The new division will with today’s numbers account for around half of the computer company’s revenues. The last quarter saw the two divisions bring in $15.1 billion compared with the company’s entire take of $30.4 billion. The move is the first publicly important decision to be announced by Meg Whitman who has been the company’s CEO since September. It is possible that layoffs will result from the decision with administrative and other overlaps being eliminated by the merge. Whitman intimated such a move was coming last month.

The change in the way the company operates comes as it faces new challenges in some of its most important sectors. Printing faces huge challenges in the future as both tablet and cloud retrieval technology’s make it increasingly a more expensive option. As the cost of such technology and its usability and goes up in the coming years printing may see a steep fall in demand as corporate customers seek to reduce costs and consumers find mobile computing options more friendly than paper. HP’s own attempt to break into the tablet market proved a huge loss for the company as it sought to provide an OS separate from Android’s and Apple’s. The acquisition of Palm a company that had developed such a system cost the company $1.8 billion which was lost after HP wound up its operations last year and pulled their tablets from the market.

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HP expects to have a solid 2012 as it believes the release of the new Microsoft Operating System, titled Windows 8, will have a positive effect on demand for new computers. The company is following Microsoft and Intel in creating a new line of Mac-book like notebooks called Ultrabooks. A great deal of these machines are to be released this year including many by HP. The company should benefit from the perceived coming demand for higher quality Windows laptops. If these predictions hold true this reorganization will seek to compliment the increased demand with a reduced cost base.

On news of the merger the company’s shares were falling this morning though they had initially been up. The lack of detail about how the merger will happen appears to have confused the market’s expectations of the company’s future.