June 13, 2005 4:43 PM PDT

HP separates PC group again, names new boss

Five months after merging its PC business with its imaging and printing group, Hewlett-Packard split them up again on Monday and appointed Todd Bradley, former chief executive of PalmOne, as new leader of its personal systems group.

Bradley, 46, had been CEO of handheld-computer maker PalmOne until February and was widely credited for turning around the company's supply-chain woes earlier this decade. Before that, he was a top operations executive for PC maker Gateway.


Todd Bradley

The move is the most dramatic change so far that HP's new CEO, Mark Hurd, has made since taking the reins at the Palo Alto, Calif.-based company in March. His predecessor, Carly Fiorina, merged the PC and printer groups in January but was ousted in February.

Vyomesh Joshi will resume his previous role as executive vice president of the imaging and printing group, HP said. Bradley also is an executive vice president.

The split makes sense for an operations-focused executive such as Hurd, said Forrester analyst Ted Schadler. "If you look at the printing business and the PC business, they could hardly be more different," he said. "If you're going to execute (a business plan), you have to have business groups that have an identified customer with a single product and a consistent go-to-market strategy."

HP itself didn't detail its rationale. "It's all about streamlining the business from a management and organizational standpoint, and allowing VJ and Todd to double down their focus," company spokesman Mike Moeller said. The two groups "share a lot of commonalities," but HP wants to "remove as much complexity out of the organizations as we can."

HP's personal systems group, which sells PCs and handhelds, reported a revenue increase from $6 billion to $6.4 billion for its most recent quarter, with operating profit increasing from $44 million to $147 million. However, the group in recent years has lost share to Dell, now the top PC seller.

Duane Zitzner, the former leader of the personal systems group, declined to comment for this story. He retired in January.

Wall Street analysts have called for HP to spin off parts of its business--perhaps computers or printers--and that's an area where Bradley has experience. Bradley ran Palm's hardware division as the company was split into PalmOne to sell hardware and PalmSource to sell software.

But Schadler doesn't see Bradley's appointment as an indication Hurd plans to split off the PC business, as IBM did by selling its PC group to Lenovo.

"Having them as an autonomous business unit makes it easier to spin off, but I would not expect Hurd is making that decision through this appointment," Schadler said. "This is purely, how do you operate the business more efficiently?"

Products shouldn't change much
Despite the upper-management changes, the company's product lines are expected to stay the same, at least for the remainder of the year, according to IDC analyst Roger Kay.

"Timing launches, color coordination, deciding whether to go with black on silver or silver on black and the 20 other things that it takes to put together a new line of products have already been coordinated by liaison teams and workgroups at a lower level," Kay said.

HP is preparing to announce its back-to-school lineup at the end of this month, and it's expected to reveal its holiday season product lines at the end of September.

HP's PC business in particular is expected to remain on track now that Lenovo Group has taken over IBM's legendary PC business, Kay added, noting that HP's PC business was already on the mend during the Zitzner era and has since continued to slowly make improvements. The blueprint set by Zitzner paid off earlier this year when HP moved to the No. 1 position in the Asian Pacific region, according to IDC.

Giving the personal systems group to Bradley is also a boon to Joshi, Kay said. HP now has a dedicated individual to move quickly against competitive changes, where before Joshi had to spend too much time dealing with numerous underlings.

But back in January, Joshi said he could handle the work. Asked if he needed to bring in another executive to run the PC business, Joshi told News.com, "That is not necessary in my mind."

 

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