Not happily ever after, yet: HP shares fall as it marries PC, printing units

Hewlett-Packard is combining its PC and printing units, a move it confirmed Wednesday. The big question: Will marrying two slow-growing businesses mean happily ever after? Investors and analysts are speaking now, failing to forever hold their peace. Shares of HP are down about 2 percent to $23.50 as of this post, although the rest of the markets aren’t doing too hot either.

Analysts are saying the combination of two units that account for half of the Palo Alto company’s revenue may not bring the cost savings CEO Meg Whitman says it will. The move is part of a broader reorganization that basically creates a split between the consumer and enterprise divisions of HP, writes Larry Dignan of ZDNet. And the consumer division’s future is unclear. Many reports, including that by the Mercury News’ own Brandon Bailey, point out that the two former “powerhouse” units are seeing falling growth in the age of mobile, tablets and the cloud. Dignan also quotes Barclays analyst Ben Reitzes, who says the combination of the printing and PC units could indicate that PCs were facing “further challenges.” Remember, the company almost dumped PCs under previous CEO Leo Apotheker. Another analyst quoted by Dignan, Shaw Wu of Sterne Agee, says the PC and printing units have “very different business models,” including that they have different product cycles and consumers buy them separately.

 

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  • David

    And of course no news about Apple’s problem with iPad3’s getting over 15% hotter than iPad2’s with many consumers complaining that the new device is uncomfortable to hold for extended periods of time.

  • sd

    Given the number of Apotheker actions that Whitman has started to unwind, I’m starting to wonder how many decisions were HP’s and how many were Apotheker thinking out loud.

    I see this consolidation as simply preparing the hardware business to be sold. These are low-margin businesses and margins likely will only go lower. HP no longer seems to have the corporate will to engineer class-leading products, leaving them to compete on price. I don’t see Whitman as the person who will reverse that tide.

    In addition, every other company with which HP wants to compete has farmed out printing. Apple no longer sells printers at all, Dell relabels someone else’s, and IBM sold their whole consumer hardware business to Lenovo. Why would HP want to devote substantial resources to product lines which won’t return the favor in profitability?

  • HP personal computer products have not been good quality for a long time. The non-IBM compatibles were good, but the Vectras were awful. The laptops with the built-in mouse were good, but the generic laptops awful. The laser printers were good, but the small ones at least are not. You remember when HP had big money in cash like Apple? Just watch as Apple’s piggy bank gets looted. Product quality will follow suit I’m sure.

    The iPad3 only 15 pct. hotter? Ha! Just set it on your lap and run some stuff and see how long that lasts or how hot you can stand.

 
 
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