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Hewlett-Packard Merges PC, Print Units Under Bradley’s Lead

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March 21 (Bloomberg) -- Hewlett-Packard Co. will combine its personal-computer unit and printer division into a group led by Todd Bradley, who ran the PC business, to help cut expenses amid declining sales and profit.

The Palo Alto, California-based company plans to start selling PCs and tablet computers by the holiday season that have “companion printers,” designed to offer consumers and businesses price advantages and new features, Chief Executive Officer Meg Whitman said in an interview today.

The move will provide unspecified cost savings and simplify the company’s strategy, branding, supply chain and customer support worldwide, Hewlett-Packard said in a statement. Whitman, who took over in September, has committed to increasing investment in research and development and decided against a proposal to spin off the $39.6 billion personal systems group, known as PSG, in a turnaround effort.

“The shift here makes sense, in terms of reducing silos and slow growth to declining businesses,” Shannon Cross, an analyst at Cross Research in Livingston, New Jersey, said in an interview. She has a hold rating on the stock. “This is not a fast-growth area anymore.”

‘Financial Challenges’

Speaking at the company’s annual shareholder meeting later in the day, Whitman said Hewlett-Packard has “real financial challenges.” The company is reducing the number of products it sells and trying to get more revenue out of each salesperson, she said. Another challenge: Commercial printing isn’t growing fast enough to offset slow sales in the inkjet division, Whitman said.

The shift to cloud computing, which lets customers get their software and computing power over the Internet, is redistributing industry profits, she said.

“Established profit pools are in play,” Whitman said. “We’re going to have to be there quickly.”

Shareholders elected the board’s 11 directors and ratified Hewlett-Packard’s compensation plan. Investors voted against a company-opposed initiative that would have given them more input on exit packages for executives.

By reuniting the PC and printing divisions, Hewlett-Packard is undoing a change made by former CEO Mark Hurd. He broke up the units in 2005, during his first year running the company.

Getting Things Done

“We’re going to develop printers, PCs and tablets that work together seamlessly,” Whitman said in the interview. “The intent behind all of these changes is to make it easier for our customers to buy from us, easier to sell, and easier for people to get things done inside HP. There’s real opportunity to increase revenue and do it in a cost-effective way.” She declined to specify the cost savings that will result from combining the groups.

Bradley joined in 2005 and vaulted the company past Dell Inc. as the world’s largest PC maker. Vyomesh Joshi, the printing division’s executive vice president, is retiring after a 31-year career at Hewlett-Packard.

The company will also combine global account sales with its enterprise group under Dave Donatelli. Marty Homlish will lead marketing for all business units.

Hewlett-Packard shares fell 2.2 percent to $23.46 at the close in New York. The stock has declined 8.9 percent this year, while the Standard & Poor’s 500 Index has risen 12 percent.

The shares fell in part today because investors and analysts wanted to hear more details about the restructuring, Cross said. “It’s still very much a work in progress.”

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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