From Infoworld.
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HP will include lucrative printing business in Compaq merger
By Dan Neel
December 7, 2001 2:40 pm PT
HEWLETT-PACKARD (HP) PLANS to include its lucrative Printing and Imaging business in the proposed merger between HP and Compaq and has no plans to spin it off as its own company, as some have advocated, said Lee Caldwell, the CTO of HP's Printing and Imaging business.
The fact that HP's Printing and Imaging business, which is No. 1 in the world for consumer and office printers, will be diluted into the mammoth company that will result from an HP/Compaq merger has been a thorn in the side of many experts who've analyzed the proposed merger. HP's Printing and Imaging business is so strong, that analysts say high-margin revenue from the sale of printing cartridges alone can make up for the financial shortcomings of other HP divisions, such as HP's PC group.
Calling HP's Printing and Imaging business the company's "crown jewel," Don Young, an analyst at New York investment firm UBS Warburg, said "the merger will result in much lower earnings power for HP and dilute the shareholder's exposure to HP's crown jewel, while raising exposure to the unattractive PC business."
But Caldwell said "we are pretty happy being part of the HP family and where the enterprise market is headed. We think having a combination of an IT capability, and a powerful printing and imaging company puts us in a strong position."
HP is continuing to fortify its Printing and Imaging business with a flurry of new patents for both consumer and business printing technologies, Caldwell said. The division is also charging forward into the commercial printing market with HP's pending acquisition of Indigo, a commercial and industrial printing systems company.
"There's been a hidden tidal wave of invention from HP" over the last nine months to a year, Caldwell said, who added that 2002 would see the largest number of new products from HP's Printing and Imaging business in recent memory.
Hinting at some of the changes to come in HP printers, Caldwell said, "today the bulk of our imaging and printing devices are used as peripherals to PCs. But we are re-inventing the image pipeline so printing basically moves over to an Internet-centric model, as opposed to a PC-centric way."
Persistent growth in HP's Printing and Imaging business will continue to bring return for HP investors, even after a potential merger, Caldwell said.
"As evidenced by the Indigo acquisition, we don't feel like we are short-changing the Printing and Imaging business," Caldwell said, adding that the Indigo acquisition "would not occur until after the HP/Compaq acquisition is finalized."
Dan Neel is an InfoWorld senior writer. |
