Below is an internal HP memo sent to company employees on Friday. In it, Bradley names every key executive who will be responsible for running the new Printing and Personal Systems Group (PPS), which will essentially replace the existing Personal Systems Group (PSG) and the Imaging and Printing Group (IPG).

As previously reported, this business unit will be, by at least one key measure, the new big dog at HP. Based on 2011 sales, the combined group is responsible for $65 billion — more than 51 percent of HP’s overall sales. Yet the two groups are flailing: HP’s PC business is under attack, if for no other reason than the fact that prior CEO Léo Apotheker sought to spin it out and thus created some damaging uncertainty for the group’s longer-term prospects. Then there’s the little matter of Apple’s iPad and other tablets, a market segment where HP has no presence to speak of as yet.

The printing business, on the other hand, was once the financial engine that kept other bits of HP afloat. While printers are generally sold at a loss, ink cartridges and other supplies have been sold at much higher profit margins than other goods. The problem is that people are printing a lot less than they used to — and are showing the photos that they once printed on iPads and tablets, instead.

Anyway, Bradley’s team is listed in detail, below:

SUBJECT/ Organization announcement

TO/ All Printing and Personal Systems employees

March 23, 2012

HP Restricted – For Internal Use Only

As Meg said this week, this realignment is designed to make it easier for you to service customers, sell HP and make it easier for you to get work done.

In Printing and Personal Systems, this mission will be our passion and our focus, and we will lead from a position of strength. We are the global leader in printing and personal systems, and we have touched hundreds of millions of lives along the way. Now, as one team, we can accelerate our path to profitable growth while we deliver the best experience to more people.

Together, we are a $65 billion powerhouse with tens of thousands of employees around the world. But we haven’t reached our full potential. To accelerate our progress, we must act swiftly.

With this in mind, I am pleased to announce the best leadership team in the industry.

Global Business Units

Each of our four GBUs is accountable for product development and long term business results, working closely with the region and function teams. This begins with understanding customer insights, designing quality into our products upfront and delivering innovation that really matters to customers. These teams will work to provide a “better together” customer experience. The four GBUs are:

· Personal Computers led by James Mouton

· Inkjet and Web Solutions led by Stephen Nigro

· LaserJet and Enterprise Solutions led by Ron Coughlin. Mike Salfity and the platform development team will be hosted within Ron’s organization.

· Graphics Solutions led by Chris Morgan

Regions

To reach our potential we need to make it easier for our customers to buy from us, and for our sales teams to serve them. Together as one team, we have a clear opportunity to simplify and improve how we work with channel partners, drive market preference and expand our sales coverage.

Given the size and scope of PPS in the U.S., I have decided to create a new role within the traditional Americas region structure that is focused exclusively on our U.S. business. In all regions, collaboration is key during this transition to ensure we deliver on the fiscal year.

· Americas led by John Solomon. Within the Americas, Lynn Pendergrass will lead the U.S. Stephen DiFranco’s role will be announced at a later date. Meanwhile, Stephen will work with John and Lynn to ensure an orderly transition.

· Europe, Middle East and Africa led by Eric Cador. Bill DeLacy’s role will be announced at a later date. Meanwhile, Bill will work with Eric to ensure an orderly transition.

· Asia Pacific and Japan led by Dion Weisler. John Solomon will collaborate with Dion during the transition.

PPS Global Functions

Our functions are also closely aligning to help us will drive a more integrated and simplified approach to how we work. Again, collaboration will be key during the transition.

· Customer Service & Support led by Enrique Lores. Bruce Dahlgren will report into Enrique, leading Managed Enterprise Solutions.

· Operations led by Tony Prophet; Reinhard Winkler’s role will be announced at a later date. Meanwhile, Reinhard will work with Tony to ensure an orderly transition.

· Sales Operations and Project Management Office led by Joshua Brenkel

· EVP executive assistants are Denise Polanco and Susan Bergstresser

HP Global Functions

In the spirit of “One HP,” the following leaders are assigned to PPS, reporting to the respective EVP of their function.

· Finance led by Jon Flaxman, reporting to Cathie Lesjak. JJ Charhon, as previously announced, will lead finance for Enterprise Services.

· Marketing led by Eric Keshin, reporting to Marty Homlish; Manny Kostas’ role will be announced at a later date. Meanwhile, Manny and Eric will work together to ensure an orderly transition, including working with Henry Gomez to identify the communications professionals who will move to Global Communications.

· Human Resources led by Teri Eyre; Nancy Phillips’ role will be announced at a later date. Meanwhile, Nancy will work with Teri to ensure an orderly transition. Both Teri and Nancy report to Tracy Keogh, HR.

· Legal led by Gabriel Buigas, reporting to David Healy

These appointments are effective May 1. In addition to welcoming this team to their new and expanded roles, please join me in recognizing the remarkable contributions of all of the leaders of the former PSG and IPG organizations.

My team and I will provide clarity on the rest of the management team as quickly as we can after a thoughtful talent review. We intend to announce L3 leaders by May 1, L4 leaders by June 1, and to have all roles in the new organization clarified by August 1.* I will also hold monthly communication sessions to keep you up to date on what’s happening and ensure your questions and concerns are heard.

This is a great deal of change for each of us. But we must meet commitments to our customers, to our partners and to each other. The true strength of our organization cannot be captured in a simple organization chart — it is defined by the people who make HP work.

Thank you in advance for helping to drive PPS and HP forward.

Todd

*For those countries that require consultation with works councils or other employee representatives, this is not intended to provide country-specific information and in no way reflects that final decisions have been made at a local level. With respect to such countries, final decisions are subject to prior consultation with works councils and other employee representatives, and compliance with local law.

HP Shares closed down 52 cents to $23.46 a share, representing a drop of 2.17 percent in the wake of the official announcement of the plan, which AllThingsD reported yesterday.

While, on its face, the combination of the PC and printer groups into a single operation would save some operational costs, investors seem unconvinced that the move will make a sufficient difference to get the company moving in the right direction as CEO Meg Whitman has promised to do, though she’s conceded the turnaround will likely take years.

At least one analyst summed up the negative sentiment around the reorg. Rob Cihra of Evercore Partners called the move “uninspiring” and reminded everyone that HP made a similar move under former CEO Carly Fiorina back in early 2005 toward the end of her tenure. Her successor, Mark Hurd, broke the groups apart again before the year was out.

One thing Cihra appreciates is that Whitman is willing to admit where the troubles are: An over-levered balance sheet and a printing business that is suffering through a fundamental — not a seasonal — decline, among other problems. But, he writes in a research note issued to clients today, admitting the problem is only the first step. “It is encouraging for new CEO Meg Whitman to have started admitting issues others wouldn’t … Our concern is that any fixes look far from easy and likely involve a marathon, while ‘reorgs’ don’t even get HP to the starting line, in our view,” he wrote. Given the drop in HP’s share price, investors, for now, seem to agree.

In fairness to Whitman, she’s only six months into the job, and today’s move is only a first step. But the first step is pretty much an admission that a bigger change is on the way, including job cuts. “Everything is on the table,” Whitman told The Wall Street Journal today, though she declined to speculate on the number of jobs that might be eliminated. It’s going to be a rocky year at HP.

The reorganization appears to be bigger than we reported. There are a few other things, aside from the combination of the PC-making Personal Systems Group and the printer-making Imaging and Printing Group. One of them is a biggie: If I’m reading this right, then the $22 billion Enterprise Storage and Networking Group appears to have been renamed the HP Enterprise Group, and it appears that the $36 billion Services Group just got combined under Dave Donatelli. That is about as equally important a strategic shift as the other combination.

Update: Not quite so big, after all: HP just called to clarify that only Technology Services is being added to the Enterprise Group, not the Enterprise Services Group run by John Visentin. Sorry for that bit of confusion.

In another move, Global Sales will report to Donatelli, and will be combined into the Enterprise Group. And it looks like Jan Zadak, who had been on the rise since being promoted under Léo Apotheker last year to head Enterprise Sales, is going to get a “new role.”

So now we know what CEO Meg Whitman meant when she said she wanted to streamline and simplify HP’s operations. Operationally, she has created what appears to be one really huge organization in PSG ($65 billion in 2011 and flatlining) and to increase the size of the newly created Enterprise Group a bit by adding to it Technology Services and Global Sales. It’s hard to determine what the combined size of the organization is by revenue, because HP doesn’t break out sales for Technology Services.

Software appears to have been left alone in this shakeup, for now. That group is run by Bill Veghte, who was recently promoted to chief strategy officer, while another software operation, the Information Management Group, which combines Autonomy, the British software firm for which HP paid $12 billion last year and Vertica. It is run by Mike Lynch, the former Autonomy CEO. British software firm for which HP paid $12 billion last year.

Marketing functions have been unified under Marty Homlish, while communications have been unified under Henry Gomez.

Here’s the press release:

HP Announces Organizational Realignment

PALO ALTO, CA — (Marketwire -03/21/12) — HP (NYSE: HPQ – News) today announced an organizational realignment to improve performance and drive profitable growth across the entire HP portfolio.

As part of this realignment, HP’s Imaging and Printing Group (IPG) and its Personal Systems Group (PSG) are joining forces to create the Printing and Personal Systems Group. The combined entity will be led by Todd Bradley, who has served as the executive vice president of PSG since 2005.

Vyomesh Joshi, executive vice president of IPG, is retiring after a highly accomplished 31-year career at HP. Under Joshi’s leadership, IPG has grown revenue from $19 billion to $26 billion, and doubled its operating profit to approximately $4 billion.

“VJ embodies the spirit of HP and his impact on the company has been tremendous,” said Meg Whitman, president and chief executive officer, HP. “Under his leadership, IPG accelerated innovation and pioneered solutions that transformed the printing market. We wish him the very best as he embarks on a new chapter in his life.”

Combining these two entities will rationalize HP’s go-to-market strategy, branding, supply chain and customer support worldwide. This will lead to a better customer experience and drive innovation across personal computing and printing. This realignment is expected to provide opportunities for cost savings and accelerate HP’s ability to pursue profitable growth and reinvest in the business.

“This combination will bring together two businesses where HP has established global leadership,” said Whitman. “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.”

In addition to combining PSG and IPG, HP also is taking steps to unify and streamline certain key business functions.

The Global Accounts Sales organization will join the newly named HP Enterprise Group. This group will be led by David Donatelli and includes Enterprise Servers, Storage, Networking and Technology Services.

The new structure is expected to speed decision making, increase productivity and improve efficiency, while providing a simplified customer experience. A new role for Jan Zadak, executive vice president for Global Sales, will be announced at a later date. Zadak will work with Donatelli to ensure an orderly transition.

HP also announced that it will unify its Marketing functions across business units under Marty Homlish, executive vice president and chief marketing officer, HP. This will allow for even more effective brand-building and marketing activities, and will create efficiencies across the business units.

HP’s Communications employees worldwide also will be similarly unified under Henry Gomez, executive vice president and chief communications officer, HP. Together these two moves will create a more powerful voice to demonstrate the power of “One HP.”

Finally, HP is moving the Global Real Estate function from Finance into Global Technology and Business Processes to address real estate consolidation and improve the workplace experience for HP employees.

“Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” added Whitman. “The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends.”

Hewlett-Packard will announce a sweeping reorganization today that will move its Imaging and Printing Group, once the jewel in the IT giant’s crown, under its PC-making Personal Systems Group, sources familiar with the matter tell AllThingsD.

Under the plan, Vyomesh “VJ” Joshi, long the executive vice president in charge of IPG, will leave the company. The combined business unit will report to Executive Vice President Todd Bradley, sources said.

Vyomesh "VJ" Joshi

HP had no comment.

A source familiar with HP’s thinking regarding the reorganization said the combination of the two groups is part of a cost-cutting and simplification measure of the type discussed by CEO Meg Whitman during HP’s last earnings conference call on Feb. 22. During that call, Whitman discussed ways of streamlining HP’s operations, both in how it interacts with customers and in how its employees do their jobs internally.

HP sees the two business groups — IPG sells printers both to consumers and businesses, and PSG sells PCs to consumers and businesses — as making more operational sense combined than apart, the source said. The plan is to have their line of business more readily integrated so they can approach customers together and with unified product offerings.

IPG was once the financial engine seen as keeping the rest of HP flush. It sells more printers than anyone else in the world, but makes most of its money selling ink cartridges and other supplies that tend to make higher profit margins than the printers themselves.

However, the IPG unit has seen its business decline in recent years. In its most recent quarter, HP reported that sales fell by 7 percent, to $6.3 billion, while the unit’s earnings from operations fell by 32 percent.

At the time, HP attributed the slide in the unit’s fortunes to its exposure to Japan, where many of its printers are built by Canon, and sold at a loss. The strong Japanese Yen created a currency headwind that hurt the business, and ongoing supply chain problems caused by last year’s earthquake and tsunami in Japan — plus the flooding in Thailand — also hurt the business, the company said. Joshi, 57, is a 31-year HP veteran, who has run the group since 2002.

PSG is the unit that had been considered for a spinoff as an independent company under HP’s previous CEO Léo Apotheker. The plan was pulled back after HP’s board of directors fired Apotheker; Whitman shelved the plan, arguing that the PC business gives HP needed size and scale in order to more effectively negotiate with component suppliers. Bradley, 53, the onetime CEO of the handset maker Palm, has run the group since 2005, and was a candidate to be CEO of the spun-out PC company, had the move occurred.

The combined business operation will give Bradley responsibility for what is easily the biggest group inside HP. Together, IPG and PSG accounted for $65 billion in sales in 2011, or more than 51 percent of HP’s overall sales. Combined profits were $6.3 billion. At that size, the combined group will be substantially larger than HP’s services group, at $35 billion in 2011 sales, and its Enterprise, Servers, Storage and Networking Group, which recorded $22 billion in sales.

The EPS number exceeded the expectations of analysts, who had anticipated HP would report per-share earnings of 87 cents. But sales at $30 billion even were light of the $30.7 billion Wall Street had expected.

Sales of PCs fell 15 percent year over year with an operating margin of 5.2 percent. Consumer sales fell by 25 percent and corporate PC sales fell 7 percent, while sales on a unit basis fell 18 percent. HP had faced a tough quarter on many fronts. With the shortage in hard drives caused by the last year’s floods in Thailand sapping overall demand for PCs, sales have been tricky and it showed. Corporate demand was thought to be relatively stable, while consumer demand continues to be slow amid stiff competition from Apple’s iPad and a tough economy overall.

Tony Sacconaghi, an analyst with Bernstein Research, said in a research note to clients issued today that HP, despite being the world’s largest vendor of PCs, appears to have struggled more with the Thailand problem than any other vendor.

On the printer front, HP’s Imaging and Printing Group saw its sales decline by 7 percent with a shockingly low 12.2 percent operating margin, down from 15.4 percent in 2011. HP’s printer unit has significant long-term problems, not the least of which is the fact that people are generally printing less. At first blush, this appears to be a serious blow to a business unit that was once the pride of the company.

Enterprise servers, Storage and Networking saw a 10 percent decline overall. The Business Critical server business — the one involving servers running Intel’s Itanium chip, which is the subject of an HP lawsuit against Oracle — saw its sales decline 27 percent. Networking revenue was flat and everything else was down.

Software was a bright spot, but a small one. Sales were up 30 percent and services grew 108 percent, but again, that’s off a low base and nowhere near large enough to offset the troubles anywhere else.

HP’s guidance for the current quarter is also below the street consensus. HP says it sees earnings of 88 to 91 cents, versus the street forecast of 95 cents. There’s no change to the full-year EPS guidance calling for $4 a share in 2012.

HP shares are down by 19 cents, or less than 1 percent in after-hours trading as of 4:26 pm ET. It’s a mixed bag, so given Dell’s performance yesterday, it seems investors are willing to accept an EPS beat alongside a slight revenue miss.

That’s a quick look at the results. HP’s conference call with analysts begins at 2 pm PT. I’ll be dialed in and liveblogging the blow-by-blow.

Here’s HP’s statement:

HP Reports First Quarter 2012 Results
— First quarter non-GAAP diluted earnings per share of $0.92, down 32% from the prior-year period and above previously provided outlook of $0.83 to $0.86 per share
— First quarter GAAP diluted earnings per share of $0.73, down 38% from the prior-year period and above previously provided outlook of $0.61 to $0.64 per share
— First quarter net revenue of $30.0 billion, down 7% from the prior- year period
— Returned $1.0 billion in cash to shareholders in the form of dividends and share repurchases
PALO ALTO, Calif., Feb. 22, 2012 – HP today announced financial results for its first fiscal quarter ended January 31, 2012. For the quarter, net revenue of $30.0 billion was down 7% from the prior-year period, and down 8% when adjusted for the effects of currency.
GAAP diluted earnings per share (EPS) was $0.73, down 38% from the prior-year period. Non-GAAP diluted EPS was $0.92, down 32% from the prior-year period. First quarter non-GAAP earnings information excludes after-tax costs of $364 million, or $0.19 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
―In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,‖ said Meg Whitman, HP president and chief executive officer. ―We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.‖

Earnings highlights
Information about HP’s use of non-GAAP financial information is provided under ―Use of non-GAAP financial information‖ below.
Trends and regional performance
In the Americas, first quarter revenue was $13.2 billion, down 9% year over year and down 8% when adjusted for the effects of currency. Europe, the Middle East and Africa revenue of $11.7 billion was down 4% year over year and down 5% when adjusted for the effects of currency. Revenue in Asia Pacific was $5.2 billion, representing a 10% decrease year over year and down 12% when adjusted for the effects of currency.
Revenue from outside of the United States in the first quarter accounted for 66% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.1 billion, down 13% from the year-ago period, and representing 10% of total HP revenue.
Revenue in HP’s commercial businesses declined 4% year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 23% year over year.
Business group results
— Personal Systems Group (PSG) revenue declined 15% year over year with a 5.2% operating margin. Commercial client revenue declined 7%, Consumer client revenue declined 25% and Workstations revenue was flat. Total units were down 18%, with a 19% decline in desktop units and an 18% decline in notebook units.
— Services revenue of $8.6 billion grew 1% year over year with a 10.5% operating margin. Technology Services revenue grew 2%, Application and Business Services revenue was flat and IT Outsourcing revenue grew 2% year over year.
— Imaging and Printing Group (IPG) revenue declined 7% year over year with a 12.2% operating margin. Commercial hardware revenue was down 5% year over year with commercial printer units down 10%. Consumer hardware revenue was down 15% year over year with a 15% decline in printer units.
— Enterprise Servers, Storage and Networking (ESSN) revenue declined 10% year over year with an 11.2% operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11%, Business Critical Systems revenue was down 27% and Storage revenue was down 6% year over year.
— Software revenue grew 30% year over year with a 17.1% operating margin, including the results of Autonomy. Software revenue was driven by 12% license growth, 22% support growth and 108% growth in services.
— HP Financial Services revenue grew 15% year over year driven by an 8% increase in net portfolio assets and flat financing volume. The business delivered a 9.6% operating margin.
Asset management
HP generated $1.2 billion in cash flow from operations in the first quarter. Inventory ended the quarter at $7.3 billion, with days of inventory up 3 days year over year to 28 days. Accounts receivable of $15.9 billion was up 2 days year over year to 48 days. Accounts payable ended the quarter at $12.4 billion, down 2 days from the prior- year period at 48 days. HP’s dividend payment of $0.12 per share in the first quarter resulted in cash usage of $244 million. HP also utilized $780 million of cash during the quarter to repurchase approximately 29 million shares of common stock in the open market. HP exited the quarter with $8.2 billion in gross cash.

Outlook
For the second quarter of fiscal 2012, HP estimates non-GAAP diluted EPS to be in the range of $0.88 to $0.91 and GAAP diluted EPS to be in the range of $0.68 to $0.71.
Second quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
There is no change to HP’s previously provided full year fiscal 2012 outlook of non-GAAP diluted EPS of at least $4.00 and GAAP diluted EPS of approximately $3.20.
Full year fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.80 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
As part of its annual financial review process, HP implemented several organizational realignments effective Q1 FY12. To provide improved visibility and comparability, HP has reflected these realignments in prior financial reporting periods on an as-if basis. These realignments resulted in, among other things, the transfer of revenue within and among various financial reporting segments and business units. The changes do not impact HP’s previously reported consolidated net revenue, earnings from operations, net earnings or earnings per share at the company level. To reflect these changes, HP released modified quarterly and annual consolidated condensed statements of earnings, segment financial results and statements of business unit revenue for fiscal 2010 and 2011, which are available on HP’s Investor Relations website at www.hp.com/investor/home.
More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.
HP’s Q1 FY12 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2012Q1webcast.

Earlier today, I announced that I will be retiring from HP.

This is not the traditional retirement. I’m not planning on spending my days playing golf or sitting around the house driving my wife crazy. I have far too much passion, energy and ideas to sit on the sidelines.

My definition of retirement is the freedom to write, speak, mentor, advise and teach without the restrictions of the traditional employee/corporate structure.

My passion is to help innovators get better at innovating and I’ve spent the better part of the last dozen years fulfilling that mission. My time at HP started out as an advisor on innovation that turned into a request to join for a year or so to “help grow the innovation culture at HP”. That was 9 years ago. I can honestly say they I’ve done everything that is within my power to fulfill that objective.

In helping grow the innovation culture at HP, I had the privilege to mentor, be a part of and lead teams that delivered some amazing innovations including: Blackbird, Firebird, Envy 133, Gabble, Twynergy, Pluribus, Vantage TouchWall, DreamScreen and many more.

These innovations were the catalyst for HP making it on to the Most Creative Company lists for the first time. The innovation teams at HP deserve the recognition.

So what am I going to do after HP?

Repeat what I did at HP by helping others get better at innovation.

In the near term, I will be focusing on the launch of my first book, Beyond The Obvious. At the same time, I will be expanding my efforts on the blog, podcast, speaking and teaching Killer Innovation Workshops.

I’m also excited that once again, I will be able to take on board seats, advisory roles and mentoring opportunities since I will no longer have to worry about conflict of interest and other corporate restrictions.

HP has asked me to stay on through a transition period and to ensure that a number of customer obligations are completed. I anticipate that my last official day at HP will be 12/31.

Yesterday — right after she took over the reins at Hewlett-Packard — high-profile Silicon Valley tech exec Meg Whitman and Executive Chairman Ray Lane got on the phone with me to talk about her new gig.

In the interview, which took place just before her debut — well, re-debut with investors, since she ran eBay for a decade — Lane said he approached Whitman for the job sometime after she joined the board eight months ago, because he felt she had the kind of leadership that HP needed and was lacking under now-ousted CEO Leo Apotheker.

Message No. 1 from Whitman, who is very good at delivering messages: “I took this job, because HP really matters to Silicon Valley, to California, to this country and to the world.”

And: “This is an icon and the place where the initial spark to create Silicon Valley came from and I am resolved to restore it to its rightful place.”

And: “I have the skills to do that.” Lane concurred, noting that while Apotheker had focus on defining some of HP’s goals, he lacked the operational, people and communications skills Whitman has.

“Leo was very wise about figuring out what HP needed to do to add value,” said Lane. “But he did not have more important tools we needed, including operational excellence, people skills and communications skills.”

He added: “Meg has all those things … and when we looked around the board room, we realized we had what we needed right there.”

Now that is some fancy CEO talk, for sure, which is why Whitman will surely be the most interesting leader HP has had in a long time.

And the troubled tech giant has had a lot of leaders — seven CEOs since 1999.

Whitman says she is undaunted by those odds and will focus on several major issues at first.

Those include, in the order she put them in (of course, using definitive numbers):

1) Focusing on meeting Wall Street expectations for HP for the next quarter over the next 45 days. “We have made a commitment,” she said. “And we are going to do everything possible to keep it.”

2) Integrating HP’s $10 billion acquisition of Autonomy, which was made by Apotheker. “As you know from my time at eBay, I know a lot about unstructured data and it is a market where no one is a leader except Autonomy,” Whitman said.

3) Come to a decision about whether to spin off or keep its Personal Systems Group, which includes HP’s consumer PC business. “We will not sell,” said Lane firmly.

4) Getting a better feel for HP and its employees. “I have been on the board for eight months, but I really need to get in there and meet its people,” said Whitman. “That is perhaps the most important thing to get right.”

Whitman added that after leaving eBay and her loss in a run for governor of California, she said she found she wanted to get back in the tech game.

“She won that race,” joked Lane, who perhaps is hoping HP will, since it freed up Whitman for the job.

And while she said she enjoyed her short — and brutal — political life, Whitman said she was happy to be back.

“Business is my first love,” she said. “And this is a huge opportunity that I sensed I could do well at.”

At least that’s Wells Fargo analyst Jayson Maynard’s take on market rumors that suggest HP, in its current state of turmoil, is ripe for a hostile bid from its old rival.

“In our view, the likelihood of an HP acquisition in the near term is extremely low,” Maynard told clients in a research note. “We think there are other potential options that are more strategic, have less complexity, and smaller price tags. We made the comment a few weeks ago that we think Oracle looks at all possibilities, and as a result to never say ‘never’ given HP’s tumultuous situation and plan to break itself up into a smaller firm. That said, we think it will take HP at least a year or so to spin off or sell the PC business and deal with those implications. So even though Oracle could financially make a large move, we think the probability is remote.”

I’d say so, though the scenario becomes quite a bit more plausible if/when HP finally splits off its Personal Systems Group. While HP’s enterprise business would certainly give Oracle another hammer with which to smite IBM, the acrimony between the two companies would almost certainly make negotiations difficult. Then there’s the issue of what to do with HP’s printer business. And, of course, HP would be an expensive buy, even for Oracle.

HP has announced to the world that it plans to stop selling its TouchPad tablets and other hardware running the webOS software it got after spending $1.2 billion to acquire Palm last year. Yet it wants to keep the webOS software, guessing, perhaps correctly, that there’s some revenue-generating business to be made of it yet, maybe in patents. Meanwhile, the hardware side of webOS is, after disappointing sales, being shut down, just maybe to be reanimated under the umbrella of the soon-to-be spun out PC business. And it’s building one last run of the heavily discounted TouchPad, to rid itself of parts it has already paid for. It’s complicated!

As it happens, a pair of internal HP memos — which were leaked to PreCentral.net, a site devoted to the Pre, the first smartphone to run webOS — appear to outline how the webOS split is going to go down.

According to the memos, the webOS software business — that is, the bit that HP still wants — is being moved inside HP’s Office of Strategy and Technology, or OS&T, which is headed up by Shane Robison, HP’s executive vice president and chief strategy and technology officer. One of the two memos was written by him.

And what of the webOS hardware group? It will remain within the Personal Systems Group, which is HP’s formal name for the personal computer business it says it wants to spin off as a separate company.

It’s not the first time that the hardware and software halves of what used to be Palm have been split into separate entities. Students of the history of Palm well remember the strange odyssey that began in 2002, when Palm — less than two years after spinning out of its prior parent, 3Com — split into two companies: A hardware company called PalmOne, and a software company called PalmSource.

The idea was that the two halves of the business had different agendas. The software business saw opportunities in licensing the PalmOS to numerous hardware manufacturers. In time, several companies took out licenses: Handspring, launched by Palm’s original founders Jeff Hawkins and Donna Dubinsky, was the original licensee, and others followed. Sony made a bunch of handhelds sold under the Clie brand; IBM sold something called the WorkPad; Garmin made a GPS-enabled PDA that could also help keep you from getting lost. Eventually a company called Access bought it and still operates it to this day.

Meanwhile, the hardware business soldiered on under the name PalmOne. In 2003, it acquired Handspring, bringing back its original founders, and in 2005 it bought back the rights to use the Palm name. Then, in 2007, came the big investment from Elevation Partners, the creation of webOS and, well, you know how that turned out.

In fact, it’s so clear that HP Chairman Ray Lane appeared on Bloomberg West yesterday and outlined the plan: “The intention of our board has always been to spin it to our shareholders,” he told host Emily Chang. HP will spend the next four months or so studying the intricacies of a spinoff and decide whether or not to actually do it. Assuming HP decides to go forward with the spinoff, expect it to take another eight months — roughly a year from now, Lane said — to get it done.

The longer it takes, the more HP stands to be hurt. As The Wall Street Journal reported today, HP customers are putting buying decisions on hold until the company gets things back on track.

Lane also talked about the last hurrah of the HP TouchPad, which sold abysmally at Best Buy and other retailers until the price was slashed to the bone. “There’s obviously demand at a certain price point for TouchPad,” he said. Too bad that price point is one that has HP losing money on every unit sold.

Earlier this week it publicly denied rumors that it was looking to acquire HP’s Personal Systems Group. But evidently that denial did little to quell market chatter that it was considering such a move. So today it has issued another, stronger statement from Samsung CEO and Vice Chairman Geosung Choi intended to end the rumors once and for all. Its gist: Samsung buying HP’s PC business is a silly idea.

“To put to rest any speculation on this issue, I would like to definitively state that Samsung Electronics will not acquire Hewlett-Packard’s PC business,” Choi said in a statement. “Hewlett-Packard is the global leader in the PC business with sales of 40 million units last year, while Samsung is an emerging player in the category and sold about 10 million units in 2010. Based on the significant disparity in scale with Samsung’s own PC business and the complete lack of synergies, it would be both infeasible and imprudent to even consider such an acquisition.”

The unit’s head and likely CEO in a spinoff scenario, Todd Bradley, took to Bloomberg TV’s airwaves yesterday for an extensive interview with hosts Emily Chang and Cory Johnson. The 13-minute segment is below.

Among the highlights: Johnson’s setup, wherein he quotes Hewlett-Packard co-founder David Packard as saying, “The only thing worse than a shitty business is a big shitty business,” and Bradley’s blunt refusal to answer when Chang asks if he endorsed the move to “explore strategic options” for the PC business.

Bradley also insists that the unit would sell at a higher valuation than 0.25 times sales, which would be about $10 billion. Most analysts say the unit would be valued at a fraction of the trailing year’s sales. The valuation argument may be moot now that Samsung, the most logical buyer, says it’s not interested, thus making a spinout more likely.

Later, Chang asks why HP isn’t giving the TouchPad and other webOS devices more of a chance in the marketplace. (Um, because sales were dismal?) She goes on to ask Bradley about his professional plans, about which there has been constant speculation since The Wall Street Journal reported in March that he had been recruited by Intel.

Bradley reiterates that he’s interested in running the independent PC company that might result from a spinout, and flatly denies that he’s looking for a new job somewhere else, then proceeds to paint a sunny picture about the PC unit’s prospects: “The PC market is only about 25 percent penetrated,” he says. He has a point, until you consider that many people might skip them altogether and move straight to tablets and smart phones.

It wasn’t until dinner this past Sunday night that CEO Léo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley’s huge unit off the cliff.

That included stopping selling hardware — smartphones and TouchPad tablets — based on the webOS it acquired from Palm last year, a $1.2 billion deal that Bradley played a big part in.

In addition, HP said it was considering spinning out its PC business and would “explore options to optimize the value of webOS software going forward.”

But, until a few days ago, several sources close to the situation said, Bradley knew nothing of these plans and neither did webOS’s key driver of late, former Palm CEO Jon Rubinstein.

This surprising lack of disclosure by HP to two of its key execs begs the question: Will they stay or will they go now?

According to sources, staying put is the plan for both for now, although it depends on what such a spinoff will look like.

It’s clear at this point that Bradley — who was once the CEO of Palm himself and was once considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year — is the leading CEO candidate of its spun-out independent PC company if that’s what HP decides to do.

But it’s not a lock, either. And, apparently, Bradley has not been locked in with regards to a spinoff either and would likely have a lot of offers from tech companies in Silicon Valley to choose from if he wanted.

“Who will they get if Bradley goes at this point, if they want to spin it off?” said one person at the company.

But, added another: “Bradley is in the catbird seat if he wants to be and it’s his to lose.”

That depends, of course, on what his is.

Questions include:

Will that new company include any of the consumer part of the printer business — a huge cash cow — if HP is indeed leaving the arena?

Will webOS go with the new set-up, so that it can take advantage of the patents and licensing income?

Will HP continue to be the brand name on the devices this computer company spinoff would make?

These are just a few of the issues in a deal of untold complexity. But perhaps the most obvious one is who would get custody of Rubinstein?

To begin: Bradley is a big fan and would certainly want him around if there were a spinoff, said several sources.

But to do what?

Rubinstein, a well-known tech exec, had been leading the webOS efforts for HP, but was recently moved upstairs to a larger but fuzzy role, to run product development and innovation for the PSG unit. He has been reporting to Bradley.

At the time, the move was seen by many as the first step out the door by Rubinstein, with one person joking that “he’d much rather be at his Mexican beach house than HP.”

Among the disgruntlements: Several sources said Rubinstein felt that TouchPad wasn’t ready to ship and that Apotheker has reneged on a public promise not to until the tablet was “perfect.”

That ire is no surprise, since the device was then subject to tough criticism, including by AllThingsD’s Walt Mossberg, who noted in his review:

“… In my view, despite its attractive and different user interface, this first version is simply no match for the iPad. It suffers from poor battery life, a paucity of apps and other deficits.”

In addition, unlike others there, Rubinstein has been more of a product guy and not an HP lifer. That begs the question of whether he’d like to sign up to another big company stint, even if he had more control.

“He’s been to that party before, and the reality is that he is not a career big company person,” said one person.

One important note: Rubinstein was unable to make webOS work when Palm was already a standalone independent company. And, although a new HP spinoff would be huge and better funded, it is still very much an uphill and competitive battle on the computer, smartphone and tablet fronts.

In addition, keeping a competitive operating system going is also a costly bear of an issue.

“It’s a cyclical, high-velocity business and there are other huge players from Apple and Google in smartphones and tablets to Lenovo and Dell in PCs,” said another source. “There might be a lot of great products in the pipeline for webOS, but it will not be easy to make them a success.”

That said, noted another person who knows Rubinstein well, “he really cares about webOS and does not want to see it go away.”

That might be true, although that is just what might happen if HP decides to sell it off to someone else or makes the spinoff a difficult endeavor.

In that case, it’s an offer Bradley and Rubinstein can refuse.

Related posts

• Hewlett-Packard Says Goodbye to PCs, webOS
• HP Pulls Plug on webOS Hardware, Leaves OS Future in Doubt
• HP And webOS: But They Seemed So Happy Together!
• Liveblogging HP’s “Everything Including the Kitchen Sink” Conference Call
• HP’s Apotheker: We Struck Out with WebOS, but Maybe Someone Else Wants a Swing?
• Viral Video: Like Palm’s Creepy Naked Lady, TouchPad’s Floating Celeb Heads Get the HP Boot
• Licensing webOS May Not Be Much of an Option for HP
• Hewlett-Packard’s PC Business: What Happens Next?
• Worth More Dead Than Alive: Could HP Turn a Profit on Palm’s Patents?
• With HP’s Raising of the World’s Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

“It’s with mixed emotions that we share that we have decided to leave employment at HP,” Galbraith and Almaer (pictured below, left and right, respectively) wrote in a post to the Palm Developer Blog. “It’s been a singular experience being part of the Palm webOS story up to now and we’re confident that the new resources HP brings will take the developer program to the next level.”

“We’ll post more on the details of our new company soon,” said Galbraith on his own blog, “but we plan on spending our time creating quality software and helping others to do the same. A particular focus of ours will be to help folks realize high-quality mobile and desktop app and web experiences using HTML5, JavaScript, and related technologies.”

And Almaer said their goal is to help developers prosper in an open environment: “We are so lucky to be in a position where a massive global platform is Open. If you look at our history with mainframes, PCs, and gaming consoles, they have all been closed proprietary systems. As developers we have been beholden to the vendors. When we are both aligned, things can work out, but as soon as the company has a change in strategy and we misalign, developers are often left by the wayside.”

The pair’s departure is an unfortunate loss for Palm and its new owner HP–a poorly timed one too. The latter has been “doubling down” on the former’s mobile operating system, webOS, since the acquisition closed. Can’t imagine losing the co-directors of the webOS developer program will do much to push that effort forward.

That said, the way HP has chosen to deal with the loss should help. The company is moving the Palm Developer Team under Jason Zajac, VP of HP’s Applications and Services Businesses and the guy responsible for software and services partnerships in its Personal Systems Group. That should put it in position to better leverage those HP resources Galbraith and Almaer mentioned in their farewell.

Incidentally, Zajac is one of four senior HP executives who’ve had their roles shifted to better focus on Palm and webOS recently. So really, HP tapping him to head up the Palm Dev program fits in quite nicely with the broader integration and evolution it clearly has planned for Palm.

A wise move, I think. It’s hard to see why anyone would pay to license webOS, around which development has been stagnant since the HP acquisition, when they could simply use Google’s (GOOG) Android OS, which is not only free, but offers a burgeoning developer ecosystem to boot.

Better to keep webOS unique to HP and offer it across multiple devices, as Apple has done with iOS. And while Bradley insists “emulating Apple is not part of our strategy,” the company would be wise to pay attention to its focus on excellence in user experience. Because if it nails that and then “doubles down” on webOS as promised, we could see some very interesting things coming out of HP in the months ahead. As I wrote earlier this year:

“In Palm’s webOS, HP has an elegant OS that it controls, something the company–a longtime Windows shop–has never had before. And with it, it can begin untethering itself from Microsoft and differentiate its brand in a market in which most devices not sold by Apple are all running some variant of Windows. Remember, webOS is scalable. And while Palm lacked the means to scale it, HP does not. It’s one of the biggest tech companies in the world, and once it brings its engineering acumen and marketing heft to bear on the OS, my guess is we’ll see it evolve into a much larger platform that extends beyond smartphones to tablets, ultraportables and other connected devices. And HP, for the first time in its history in a long time, will be firmly in control of both its hardware and software.”

[Image credit: Willowhaven / Insanely Mac]

Because this is a big CEO search in Silicon Valley, naturally the Hewlett-Packard board turned to star headhunter Jim Citrin of Spencer Stuart for help in finding the next leader for the tech giant.

He should not have to look far, since sources close to the situation said it is likely an internal candidate will be chosen over a more high-profile outsider.

The reason? As Maverick’s motto in the hit movie “Top Gun” goes: The need for speed.

As in speed at moving the focus at HP (HPQ) away from the scandal around the controversial departure of CEO Mark Hurd, his move to rival Oracle (ORCL) and the ensuing lawsuits, and back to the business of, well, business.

That would be best served by putting in place someone who knows the company well. And since the major divisions of HP are so huge that they could be considered companies unto themselves, these are very seasoned and experienced execs.

At the tippy-top of that list is Todd Bradley, who runs its Personal Systems Group and is also known as the man who bought Palm, the smartphone maker, which he once ran. (He is pictured above, headed for work on the 101.)

While making Palm’s technology a success for HP is a big risk, the move shows a nice proclivity for boldness. In addition, he is well known and well liked in Silicon Valley, even though he always deftly sidles away from BoomTown whenever I approach (which is, to be honest, also a very good instinct).

Also on the very short list, although much less mentioned than Bradley: Vyomesh Joshi, who runs HP’s giant printer business.

One minus: Joshi–an incredibly affable man known as VJ–has also been a longtime director on the worser-board-than-HP at Yahoo (YHOO). So, in my mind, he’d have some–in the immortal words of Ricky Ricardo–’splaining to do.

And while Ann Livermore, who runs the enterprise business, has been mentioned many times in the past for a bigger role at HP, she remains, most sources say, a longshot. Here it’s kind of like that old Oscar cliché–being nominated is the real honor.

Of course, there are plenty of outsiders who are certainly solid selections and some wilder ideas the board could consider–my pick would be Google (GOOG) President of Global Sales Operations and Business Development Nikesh Arora or Juniper (JNPR) CEO Kevin Johnson.

But it’s clear an internal candidate would settle the waters sooner than later.

And, despite internal rivalry, it would also prevent an exodus of these execs, which is the last thing HP needs right now.

Until a selection is made, here is the video of that scene from “Top Gun” to get everyone pumped:

Analysts had been expecting $1.06 a share on $30 billion in revenue.

All in all, a strong quarter. PC shipments grew 26 percent year-over year. Server revenue rose 11 percent. And Personal Systems Group revenue was up 20 percent.

Looking ahead to its second quarter, HP (HPQ) expects non-GAAP earnings-per-share of $1.03 to $1.05 on revenue of $29.4 billion to $29.7 billion. The company also raised its revenue outlook for fiscal 2010 to between $121.5 billion and $122.5 billion from an earlier forecast of $118 billion to $119 billion.

“HP is well-positioned to outperform the market,” HP CEO Mark Hurd said in a statement. “The strength of our portfolio, leaner cost structure and accelerating market momentum give us the confidence to raise our full-year outlook.”

Hewlett-Packard’s second-quarter financials may have been in line with forecasts, but they were troubling nonetheless. A number of analysts predicted that the company might report better-than-expected earnings. Sadly, it did not. HP’s net income for the period fell 17 percent to $1.7 billion, or 70 cents per share. Excluding one-time items, the company earned 86 cents a share, compared with a profit of 87 cents a share in the same period last year. The results include charges of 2 cents a share related to a patent dispute. Sales fell three percent to $27.4 billion. Every division of the company, save one, reported a decline in revenue. The lone highlight, Services, posted an increase, but that was due primarily to HP’s acquisition of EDS. The grim details:

Enterprise Storage and Servers: down 28 percent
Software: down 15 percent
Personal Systems Group: down 19 percent (though it claims the leading market position in PCs in every region)
Imaging and Printing Group: down 23 percent
Financial Services: down 6 percent
Services: up 99 percent

Clearly, the decline in consumer and business spending is weighing heavy on HP (HPQ) and will continue to do so. The company expects third-quarter revenue to be approximately flat to down two percent sequentially. And it says full-year revenue will slip approximately four to five percent from the prior-year period.

UPDATE: During a conference call to discuss earnings, HP’s leadership said the company will sack about two percent of the workforce in the months ahead as it looks to trim costs. 6,400 employees will lose their jobs as a result.