HP Dissolves Global Operations Into Core Units

HP today said it would liquidate its global operations group and spreading it around to its business groups, the latest in a streamlining plan to make the company leaner and meaner.

HP expects the move, along with several other reogranizations the company has made in the past year, will result in a lay off 15,300 workers by the end of fiscal year 2006.

Supply chain, procurement, logistics, order fulfillment, customer relationship management and other related functions will be added to HP’s Technology Solutions Group (TSG) Personal Systems Group (PSG) and Imaging and Printing Group (IMG).

The company’s three main business groups will now have greater accountability over the full range of their operational activities.

For example, PSG will host central direct procurement and carry out procurement for goods used across the company. IPG will host the worldwide logistics function and carry out companywide logistics procurement, freight cost management and customs operations.

“This realignment will enable us to build on this momentum while enhancing accountability and enabling greater focus and customization of operations based on the needs of our customer segments,” CEO and President Mark Hurd said in a statement.

The realignment of HP’s global operations is expected to be finished in November.

The move is the latest step in a July 2005 turnaround plan by Hurd to provide a simpler reporting structure with fewer management layers, reduce costs and focus on serving customers.

At the time, HP said it planned to cut almost 10 percent of its global workforce to save $1.9 billion. Like today’s dissolution of its operations, the company also dissolved its Customer Solutions Group (CSG) into its core TSG, PSG and IMG.

In 2005, Hurd also split a number of functions that had previously been combined, including separating the role of chief marketing officer from the sales function and separating IPG from PSG.

Hurd’s appointment in 2005 seems to be paying dividends.

HP reported April quarter earnings of 54 cents a share, a nickel ahead of analysts’ estimates, on sales of $22.55 billion. Analysts expect $91 billion in 2006 sales for HP, compared to $90.6 billion for IBM.

HP  shares were up four cents in after-hours trading to $32.90.

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