If HP merges PCs and printing, executive power will shiftOctober 2, 2009: 2:25 PM ET
If HP CEO Mark Hurd does merge the PC and printing businesses, what will that mean for printing chief Vyomesh Joshi?
A few months back, I spent some time at Hewlett-Packard (HPQ) headquarters with Joshi, who's known around HP simply as "VJ." We talked about how he led the printing group to become a sales and profit powerhouse, the how the slowdown in printer sales growth is unfolding, and how he's trying to get things going again. And we talked about how he's doing under Hurd, an unsentimental numbers guy who hasn't been shy about saying the printing business needs to shape up.
For example, Hurd arrived at the company in 2005 and quickly identified large corporations as a growth area for the printing business. Hurd told Joshi that his printing executives didn't have the right experience to win corporate customers, and brought in new talent including sales exec Bruce Dahlgren. That wasn't an easy experience, Joshi said, but HP culture has enough humility to admit when it's time for outside help.
Hurd has also pushed the printing unit to cut costs from profitable but slow-growth product lines like single-function printers, and invest the savings in promising areas like multi-function printers, commercial printing, and managed print services. Again, Joshi said it wasn't easy to cut some of the businesses he had helped to build, especially when they were still profitable. But he insisted that Hurd's approach makes sense.
So I wasn't exactly shocked earlier this week when the Wall Street Journal reported that Hurd might merge HP's PC and printing units into one giant entity – a move that would almost certainly put PC division chief Todd Bradley in charge of the combined operation, and leave Joshi's future up in the air. It's not that Joshi and Hurd don't get along – the two clearly respect each other's talents. But Hurd doesn't have the same kind of rapport with Joshi that that he has with Bradley and enterprise chief Ann Livermore. And it doesn't help that Joshi's business has been going through a tough time over the past few years while the enterprise and PC units have improved.
If Hurd does merge PCs and printing, there would be some precedent. He has already folded outsourcing unit EDS into the enterprise technology group run by Ann Livermore, giving her dominion over a portfolio that includes servers, software and services – a staggering 47% of HP's revenue.
Similarly, putting printing and PCs under one executive could simplify some things. Just as Livermore is the go-to person for corporate relationships, the PC and printer executive would manage retail, small business and consumer; under the current structure, the PC and printer units have sometimes jockeyed for control of the overall consumer strategy and retail approach. It could also yield some financial benefits; analyst Doug Reid at Thomas Weisel Partners estimates that combining the units could boost operating margins by up to 60 basis points by fiscal 2012.
Whatever happens, Joshi will be fine. He has spent nearly 30 years with HP (his big anniversary is next summer, I believe), including nine as a top executive. He serves on the board of Yahoo (YHOO). Perhaps most important, he's not only loved inside HP, he's loved among executive recruiters as well. If Joshi does leave HP in a management shuffle, and a high-profile Silicon Valley CEO job opens up, there's a good chance he'll be on the short list. (AAPL) (DELL)