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Hewlett-Packard Company (HPQ): Why HP Ousted Todd Bradley From Printer/PC Unit?

 June 18, 2013 01:37 PM

(By Mani) Shares of Hewlett-Packard Company (NYSE: HPQ) set a new high after it reshuffled its PC/printing leadership. Todd Bradley, who was heading HP's Printing and Personal Unit Division, is stepping down to focus on China, and would be replaced by Dion Weisler.

The above change is considered as a crucial step by Meg Whitman, who was appointed as CEO in September 2011, has been making sweeping organizational changes for the past several months.

The company said Bradley would work with Whitman on enhancing HP's business in China and extending the company's critical channel partner relationships around the world.

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Bradley would also work with Whitman on identifying potential partnership opportunities with early-stage companies that can contribute to HP's long-term growth.

The real reason for Bradley's stepping down is said to be the fact that he was sidelined at the company following some strategic missteps at the PC/Printing unit.

"Todd Bradley had made series of strategic mistakes, his departure should have happened long before," Global Equities Research analyst Trip Chowdhry wrote in a note to clients.

Bradley was heading HP's PC business between 2005 and 2012, when it merged the printing and personal systems business into one unit under his leadership.

Previously, Bradley was the shining star in the HP ranks as he made HP the biggest PC vendor in the world, crushing Dell and Lenovo before the entire PC market weakened due to the onslaught of tablets.

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Bradley killed Palm WebOS, which was regarded as one of the best mobile OS and had a very good chance of being the No.2 operating system currently held by Google's Android. Even iOS copies some of the critical features that Palm WebOS had 3 years back.

Bradley also made a mistake to go with Windows 8 Mobile for tablets, and it was not faring as expected. Then he decided to go with Android Tablets, but there is already heavy competition in the form of Acer, Asus, Samsung and Lenovo.

"Today..HP does not have a mobile strategy...being a reseller of Windows Phone 8 or Android is not a winning strategy," Chowdhry noted.

Under Bradley,HP completely missed on the shifts within the industry. He wrongly focused on supply chain, while the Industry was going towards asymmetric pricing models and innovation, pioneered by Apple, Inc. (NASDAQ:AAPL).

For the second quarter ended April 30, Personal Systems revenue was down 20 percent year over year with a 3.2 percent operating margin. Commercial revenue decreased 14 percent, and Consumer revenue declined 29 percent. Total units dropped 21 percent with desktops and notebook units down 18 percent and 24 percent, respectively.

Though the PC market continues to be weak, if HP has made right decisions, it may have weathered this PC downturn via its mobile strategy and the results might have been different.

Bradley could still create a charm if he manages to generate more revenue from Asia, mainly China where half of the population is still not connected to Internet.

Bradley would be succeeded by Dion Weisler, currently senior vice president for HP printing and personal systems (PPS) in Asia Pacific and Japan (APJ). He will report to Whitman and join the company's executive council.

Weisler joined HP in January 2012. He has more than 23 years of experience in the IT industry. Prior to joining HP, Weisler was vice president and chief operating officer of Lenovo's Product and Mobile Internet Digital Home Groups. Before that, he ran Lenovo's businesses in Korea, Association of Southeast Asian Nations (ASEAN), and Australia and New Zealand (ANZ). Weisler also enjoyed a successful 11-year career at Acer, where he served as managing director of Acer UK and also helped build Acer's business in Central and Eastern Europe.

The Street is not sure whether the replacement is good enough to bring the radical shift in strategy and revive the PPS unit. But, investors have welcomed the change of leadership in HP and the stock touched a new 52-week high of $25.52. The stock has gained 67 percent year-to-date.



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