HP's new CEO Mark Hurd has started shaking things up, announcing yesterday that the PC and printer divisions are to split. This undoes one of the last major decisions made by Hurd's predecessor, Carly Fiorina.
Hurd said that managing the highly lucrative printer business and the struggling PC division separately, the company could "sharpen our competitiveness and improve our cost structures". Yet only in January this year, HP said combining the two groups would maximise efficiency, intensify its competitive focus and help speed the flow of products to customers. At the time, HP struggled to convince observers that the merger would deliver the promised benefits.
Although the two divisions are to split, it's not a total divorce. They will continue, for example, to "leverage their common supply chain and distribution channels". And both remain inside HP, despite the siren calls from Wall Street to spin off the printer business and sell the PC group.
The newly independent Personal Systems Group will be headed by former PalmOne CEO Todd Bradley, who has been hired as executive vice president. The division, which has struggled financially, produces handheld, notebook and desktop PCs.
Vyomesh Joshi, who had been running the combined Imaging and Personal Systems Group, will now serve as VP of HP's highly profitable Imaging and Printing group, the same role he had held before the two groups were merged in January. Until Hurd's appointment, some saw Joshi as Fiorina's potential replacement.
Hurd signed on as HP's chief executive at the end of March but until now had not made any management changes.
The company is looking to simplify the management structure of the group and to "find ways we can get some of the cost out of the businesses and streamline things," said an HP spokesman.
The re-separation will make it harder for HP to hide the PC group's poor performance, but it can also be taken as a comment on Fiorina's performance, said Charles King, principal analyst with Pund-IT. "You could interpret it as a slap," he said. "'No, you weren't doing your job right, and now we're going to put things back together the way they should be.'"
Bradley resigned as PalmOne CEO earlier in the year. Previously he had worked at Gateway, where he served as executive vice president, global operations. He also held positions at GE Capital, Dun & Bradstreet, and FedEx.