Wringing profits out of a PC company is a demanding task for any business executive, but Hewlett-Packard Co. believes the executive who has generated healthy profit margins within its printer division can work the same magic on its PC group in a combined organization announced Friday.

Vyomesh Joshi, executive vice president of the Imaging and Printing Group, will head up a new organization known as the Imaging and Personal Systems Group (IPSG), effective immediately, said Bob Sherbin, an HP spokesman. Duane Zitzner, executive vice president of the former Personal Systems Group, has retired as of Friday, but will help HP and Joshi plan the integration and transition of the two businesses, Sherbin said.

Analysts were initially unsure how much of an impact the reorganization would have on HP's customers. The two businesses already coordinate their activities on everything from launch strategies to the colors of future products, and the sales organizations are also very closely aligned, said Stephen Baker, director of industry analysis with NPD Techworld in Reston, Virginia.

"I don't think having them in one group is going to have them working together any more closely than they are already. It just seems like it's shuffling the deck chairs a little," Baker said.

HP Chairman and Chief Executive Officer Carly Fiorina has shown a willingness to overhaul the company's organizational structure if certain groups are not living up to expectations for profitability. In 2003, HP combined the Enterprise Systems Group with the HP Services Group in hopes of ending losses within its server and storage group. The former head of HP Services, Ann Livermore, took over the combined organization currently known as the Technology Solutions Group, and has delivered increased profits in recent quarters.

In November, Fiorina said that the PC and server divisions have not lived up to expectations for profitability, and that HP was looking for ways to improve profits within the groups. Few companies are able to sustain quarter after quarter of healthy profits by selling PCs. Only Dell Inc. has been consistently profitable in recent years selling PCs.

The printer business, however, is the most impressive division within HP from a financial perspective. It has consistently posted the largest profits within the company, and enjoys a strong brand reputation among consumers and business customers.

HP's printer and PC groups posted identical revenue of US$6.5 billion for the company's fiscal fourth quarter, the period ended Oct. 31. However, the PC business recorded an operating profit of just $78 million, which was the division's strongest performance in four years, while the printer business made $1.1 billion in operating profits during the quarter. The entire company recorded a $1.3 billion net income for the quarter.

The timing of HP's announcement is interesting, given that it comes days before IDC and Gartner Inc. release their fourth-quarter market share numbers of the PC market, and a month before HP's quarterly results are announced, said Roger Kay, vice president of client computing with IDC. HP's PC business usually posts its best quarter of the year during the holiday shopping season.

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