SignOnSanDiego.com > News > Business -- HP print = division changing its image

From: Subject: SignOnSanDiego.com > News > Business -- HP print division changing its image Date: Sat, 28 Jun 2008 11:31:58 -0400 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----=_NextPart_000_0123_01C8D912.935C5640" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.3198 This is a multi-part message in MIME format. ------=_NextPart_000_0123_01C8D912.935C5640 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.signonsandiego.com/news/business/20080620-9999-1b20hp.html SignOnSanDiego.com > News > Business -- HP print = division changing its image

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	More=20 Business news HP = print=20 division changing its image=20

HP employs about 2,000 people=20 in San Diego working on all-in-one and photo inkjet = printers, among=20 other products. It also has large operations in Corvallis, = Ore.;=20 Vancouver, Wash.; and Boise, Idaho. Joshi made the = announcement this=20 week in a memo to employees.=20

The moves highlight the head winds facing HP's $28 = billion=20 printing division, which for years was among the sprawling = company's=20 largest and most profitable business units.=20

Although Imaging and Printing made up about one-quarter = of HP's=20 revenue and about 50 percent of its profit last year, it is = a mature=20 business and therefore not growing as fast as HP's other = divisions,=20 such as computers and information services. Soft U.S. sales, = weak=20 pricing on printers and fewer people printing photos at home = have=20 hurt the division's profits.=20

=93HP's market value is largely measured by its rate of = growth, and=20 (Imaging and Printing) is focused on a market that is = actually in=20 comparative decline,=94 said Rob Enderle of the Enderle = Group, a Bay=20 Area technology research firm. =93Most of the imaging = happening now is=20 off paper and on displays, where this division has a = comparatively=20 small footprint.=94=20

Joshi's strategy for growth has been to shift the = division from a=20 =93printer=94 to a =93printing,=94 company, focusing on = getting a larger=20 share of pages printed off the Web, expanding graphics = printing and=20 offering services to large businesses to better manage their = printing needs.=20

=93For the last year, I have spoken about the massive = opportunity=20 in front of IPG as it shifts from a printer to a printing = company,=94=20 Joshi said in a memo to employees that HP released to the = media.=20 =93This realignment is not just about doing things better. = It's about=20 doing things differently to strengthen IPG for the = future.=94=20

HP contacted reporters to announce the reorganization, = but=20 declined to provide details. It said the reorganization cuts = the=20 number of business units inside Imaging and Printing from = five to=20 three. Inkjet and Web Services have been combined, as have = Laser and=20 Enterprise Services. Graphics remains a stand-alone unit.=20

Gary Peterson, an analyst with Gap Intelligence, a San = Diego=20 based consulting firm, said Joshi's division carried HP for = years=20 during the toughest times for the company, before Mark Hurd = became=20 chief executive three years ago. During that period, the = printing=20 division produced nearly all of HP's profits.=20

Peterson thinks the company is =93taking some flak=94 = from division=20 employees. Workers at HP's Corvallis plant told newspapers = of the=20 pending job cuts last month.=20

=93They've been getting blood out of a stone for 10 = years,=94=20 Peterson said. =93HP just spent $13 billion to buy EDS, and = the people=20 who made those funds available for the purchase are the ones = who are=20 being cut back. That's why these layoffs are being leaked to = the=20 press.=94=20

Roger Kay, president of Endpoint Research, said HP's = printer=20 group has expanded the market in =93every possible way, = including=20 lowering the price of hardware to stimulate sales of = consumables.=20 But there's a large, underlying trend away from printing. So = they're=20 in a situation where they already dominate a market that is = mature.=20 So where do you grow?=94=20

Joshi, who has run the division since 2000, stressed that = HP has=20 only a small market share of total pages printed, including = pages=20 printed off the Web. His aim is to provide tools that make = Web=20 printing easier for consumers, as well as go after = commercial=20 printing shops, small business printing and international = markets.=20

The reorganization helps focus the division toward those = growth=20 markets, said Shaw Wu, an analyst with American Technology = Research=20 in San Francisco, in a note to clients.=20

=93There likely will be press and investor focus on = layoffs but we=20 believe the numbers likely will be less than expected,=94 he = said.

Mike Freeman: (760) 476-8209; mike.freeman@uniontrib.com<= /B>=20

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