As per a recent article in the Wall Street Journal, Hewlett Packard Company (HPQ) is considering merger of its Personal-Computer (PC) and Printer businesses into one single division. The combined unit would be headed by Todd Bradley, the chief of the personal computer division. This indicates that the printing business, once the biggest revenue earner for the company, is going through a bad patch and the company is currently focussing on building other businesses relating to PC, commercial computing hardware and software.

The company did not confirm the date or details of this restructuring process, as the final decision will be made by the company CEO, Mark Hurd. Even in the third quarter, the “Imaging and Printing” business did not perform well, as the segment revenue fell 19.6% year over year. Both ink supplies and hardware posted double-digit declines. We believe the segment has come under pressure due to strong competition from cheaper brands. Printer unit shipments decreased 23.0%, with Consumer printer hardware units down 16.0% and Commercial printer hardware units down 16.0%.

In the recent past, the company has made serious effort to boost its Printing and Notebook business. In the PRINT 09 tradeshow, the company showcased its latest offerings in its Graphics Solutions Business. The company claims this segment addresses the $115 billion potential global market opportunity for digital color printing. So this segment offers good business opportunities for the company.

This apart, the company disclosed a new alliance with the leading document management company, Pitney Bowes, which will help to accelerate the HP T300 Press (Inkjet Web Press, a 30-inch wide, color inkjet printing device) penetration in the digital print and offset market.

Other than this, H-P also entered into a into a strategic agreement with Toshiba. As per the agreement, Toshiba will be able to sell H-P’s laser jet product line to customers. This agreement expands and strengthens Toshiba’s overall product offering while also expanding the reach of HP products to more customers.

H-P has also taken up the task of enhancing its notebook product line. The company recently came up with new advanced gadgets in this segment. The most notable product in this segment is what the company claims to be the world’s slimmest full-performance notebook PC along with a slim consumer notebook, expected to strike an optimum balance between enhanced performance, mobility and price. The products, christened HP ProBook 5310m and HP Pavilion dm3, are expected to cater to the same segment as the affordable HP Pavilion dv2 series did in the first half of 2009.

Technology research firm IDC expects that the lightweight notebook market will grow in the next few years, so the company is trying to cash in on it by introducing new products. Although prospects are good, we are cautiously optimistic about the return the company will derive from this segment — competition is fierce in the notebook market, and every other computer maker is coming out with new products.

The company recently provided guidance for fiscal 2010. The company expects revenue of approximately $117.0 – $118.0 billion, up approximately 3.0% to 5.0% from 2009 estimated revenue. GAAP earnings per share are expected to be in the range of $3.60 – $3.70, a growth of 17% to 20% from 2009 estimated earnings, while non-GAAP earnings per share are expected to be in the $4.20 – $4.30 range.

H-P also said the projections were conservative and could easily exceed the company’s forecast. The company forecasted revenue growth of 2% – 4% in its services division and 3% – 5% growth in its PC business. HP expects 0% – 2% growth in its printing group and a 2% – 4% growth in storage and servers for fiscal 2010. This goes to show the company has highest growth expectation from the PC segment, while the lowest being the printing segment.
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