Diversified technology bellwether Hewlett Packard (Nasdaq: HPQ) has no alternative but to rejig its business units in an effort to reinvent itself as a major computing company. The company announced its intension of amalgamating its printing and PC divisions in the morning.
The company is struggling to hold its market share in the PC segment, let alone extending it. This is partly due to the emergence of newer devices such as media tablet PCs and smart phones. The emerging technologies are hurting HP's sales.
The company had a market share of 17.69 percent in 2011 by shipping 62.33 million units worldwide, weaker than 64.25 million units with a market share of 18.52 percent in 2010. However, HP's United States market share rose marginally to 26.08 percent from 25.98 percent, despite PC shipments dipping 4.6 percent to 18.6 million units from 19.5 million units last in 2010, according to data from IDC.
Excluding Japan, in the Asian Pacific region, HP lost its market share. Its share fell to 9.9 percent from 11.8 percent by recording 6 percent downside in PC shipments units. This is in contrast to Dell's (Nasdaq: DELL) PC shipments growth of 23 percent, and extending its market share to 10.4 percent in 2011 from 9.4 percent in 2010.
The trends don't bode well for HPs future in the personal computing space. The emerging markets offer enough space for PC makers to grow, but, unfortunately for HP, it is lagging behind Lenovo, Acer and Dell in Asia/Pacific, excluding Japan.
In the global hardcopy peripherals market, HP enjoyed a sizeable market share of 41.5 percent in 2011, though it slipped from 42.1 percent in 2010. The company could ship 52.28 million units, down from 52.66 million units in the prior year. The nearest rival, Canon, slightly increased its market share to 18.4 percent from 18.1 percent.
As part of its revamping, HP decided to entrust the handling of combined entity to Todd Bradley, who has been handling the affairs of Imaging and Printing Group (IPG). The joint entity will be named as Printing and Personal Systems Group.
The expectation is that the union will allow HP to reinvent itself as an established global leader in both the PC and IMG space. HP realailizes that it has to streamle some of its business functions with a view to save costs.
Last year, the company contemplated exiting or spinning off its PC business, but the board dithered and decided to continue with the low-margin but business critical unit.
Significantly, the company's current announcement is silent on issues such as any workforce reduction, cost savings and the expected time to benefit from rejig.
Shares of HP are trading down by 46 cents or 1.9 percent at $23.52. During the 52-week period, the stock ranged between $21.50 and $43.28.