http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/121384592980530.xml&coll=7
HP plans overhaul of lucrative printer division
Without
detailing how it will restructure the unit, based largely in the
Northwest, the company hopes to cut costs and develop new markets
Thursday,
June 2008 Hewlett-Packard Co. said Wednesday that it plans to overhaul
its hugely profitable printer division, cutting costs as it pursues new
markets. The company declined to detail how its changes would affect
jobs in the printer group, which is the focal point of HP’s substantial
operations in the Northwest.”We’re going to rebalance the work force as
necessary to match the new structure,” Ryan Donovan, an HP spokesman,
said at the company’s headquarters in Palo Alto, Calif.Printers,
scanners and related products produced one-quarter of HP’s $104 billion
in revenues last year, and nearly half of its $9.6 billion operating
profit. The company invented its inkjet technology in Corvallis, and
printers have remained the focus of operations there and at campuses in
Vancouver and Boise.
HP employees in the Northwest have been
anticipating job cuts for several weeks after the company told
Corvallis workers it planned to shift some Oregon manufacturing
overseas and make other changes. It’s not clear whether Wednesday’s
shake-up is related to those earlier initiatives.HP has an estimated
3,500 employees in Idaho, 2,500 in Corvallis and as many as 1,800 in
Vancouver.The printer group’s new structure is designed to focus HP on
what the company calls “Print 2.0. ” The initiative is a bid to make
printing more efficient and to expand HP beyond its core inkjet, laser
printer and scanner businesses, which are becoming more competitive and
less profitable as those products mature. Xerox, Lexmark and other
companies compete with HP in various parts of the printer business.In
particular, HP hopes to provide tools for corporate customers to
measure their printing costs and productivity. It also plans to enter
new markets in large-format, commercial printing, and on smaller
surfaces such as pills.After the restructuring, HP said its printer
groups will be divided into three markets: Consumers, corporations and
print services.The consumer group will be led by Steve Nigro, HP’s
senior executive in Corvallis. It will focus on inkjet hardware, retail
publishing and ink supplies, among other products.Amid HP’s pursuit of
new printer markets, Pacific Crest Securities analyst Brent Bracelin
said the company’s cost-cutting plans puzzle him.”Given that it’s the
most profitable division, I can’t imagine there’s a lot of fat to cut,”
he said.
HP chief executive Mark Hurd has already cut costs in
other HP divisions, helping pull those groups out of the red and
substantially improving the company’s overall profitability. Bracelin
said he suspects that Hurd’s focus is now turning to printers.”The
microscope is now being applied to the printer business,” he said. “I
think that’s the new way of competing in what’s increasingly a global
economy.”Donovan, the HP spokesman, said that by becoming more
efficient the company plans to save money to invest in new areas.”Just
because you cut costs in a growth market doesn’t mean you can’t pursue
that market,” Donovan said.