• We’re currently investigating an issue related to the forum theme and styling that is impacting page layout and visual formatting. The problem has been identified, and we are actively working on a resolution. There is no impact to user data or functionality, this is strictly a front-end display issue. We’ll post an update once the fix has been deployed. Thanks for your patience while we get this sorted.

HP kills TouchPad, looks to exit PC business

P

Pardus

Diamond Member
LINK

First Published: August 18, 2011: 1:32 PM ET

NEW YORK (CNNMoney) -- Hewlett Packard is taking a hatchet to its business and doing some radical restructuring.

The company said Thursday that it is looking to spin off its industry-leading but struggling personal computer business. HP also killed off the TouchPad tablet it launched less than two months ago, and its webOS smartphone line. The move essentially leaves for dead the webOS software HP got by acquiring Palm last year.

Print Though the move was unexpected, it's not all that surprising: Despite a huge marketing campaign, TouchPad sales struggled so much that HP almost immediately cut the tablet's price by $100.

HP also said it is in discussions to buy British software developer Autonomy. Terms were not disclosed, but a Bloomberg News report said the deal would be for $10 billion, citing anonymous sources with "direct knowledge" of the company's plans. Autonomy specializes in database search and other enterprise software technologies.

HP's (HPQ, Fortune 500) stock swung wildly since the news first broke early Thursday afternoon. Shares had fallen by as much as 8% in early trading on Thursday. After Bloomberg's report, shares rebounded and shot up as high as 8% above Wednesday's closing price before falling back into negative territory in afternoon trading.

The company said its board of directors has authorized executives to explore "strategic alternatives" for its Personal Systems unit, including a full or partial spin-off or sale.

That unit includes HP's PCs and mobile devices, and accounts for about 1/3 of the company's annual revenue.

The news came as the company announced a disappointing financial outlook. HP reduced its full-year revenue forecast by 9% and its profit forecast by 16%, though that dreadful number includes charges related to spinning off its PC business. Without those charges, HP still lowered its previous estimate by 4%.

For the previous fiscal quarter, which ended July 31, the Palo Alto, Calif., company said it earned 93 cents per share, up 24% from a year earlier. Results included one-time charges totaling 17 cents per share. Without the charges, HP said it earned $1.10 per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, had forecast earnings of $1.09 per share.

Sales rose less than 2% to $31.2 billion, in line with analysts' forecasts.

The bold move to reshape HP -- the world's largest tech company by annual revenue -- would be in line with the strategic vision CEO Leo Apotheker unveiled in March. Apotheker wants to place greater emphasis on the company's fast-growing software and server businesses, and leverage those units to improve its slow-growing services division.

In May, Apotheker told analysts on a conference call that the company needed to put greater investment into its "value-added services" or it will "be left with a business that is running out of steam."

A deep dive into enterprise software would also take Apotheker back to his roots. He was previously the head of German software giant SAP (SAP).

Consumer PC sales have slumped industry-wide for the past several quarters, as tablets like Apple's (AAPL, Fortune 500) iPad have slowed netbook and mini-notebook sales. The trend has hit HP particularly hard: sales to consumers fell 23% between February and April.

But a move to sell off its PC unit would be a 180-degree turn for HP, which 10 years ago bought Compaq in an acrimonious deal that eventually helped cost then-CEO Carly Fiorina her job. That acquisition made HP the largest PC manufacturer in the world.

Despite its recent struggles, HP still sells more PCs than any other vendor, shipping 14.9 million PCs last quarter -- enough to give it control of 17.5% of the market, according to Gartner. Dell (DELL, Fortune 500) and Lenovo are in a near-tie for second place, each with more than a 12% share of the market and shipments in excess of 10 million units last quarter
Click to expand...
 
ActiveX said:
The company said Thursday that it is looking to spin off its industry-leading but struggling personal computer business. HP also killed off the TouchPad tablet it launched less than two months ago, and its webOS smartphone line. The move essentially leaves for dead the webOS software HP got by acquiring Palm last year.
Click to expand...

WTF. 😡:colbert:
 
Wow, killing TouchPad so soon after launch? I have an old roommate who works for HP now due to the Palm acquisition. Wonder what his plans will be with webOS being killed.
 
It's weird, like everywhere I look in homes and businesses I see Dells around here, but evidently HP is even bigger. I never see Lenovo either. Are those numbers in the final paragraph global maybe? Though almost every printer is HP that I see.

Crazy how quick they're jumping that ship though. Hard to see it really latching on though, so I guess I see why.
 
Apotheker, in my opinion, is an idiot. You'd think HP could've found someone better than him -- IIRC, SAP kicked him to the curb.
 
Sometimes really big businesses do things that baffle me. Why in the world would they want to get out of a market they are dominating? I mean the PC business, not webos and tablets.

Are they just trying to do this in advance of the ultimate death of the PC? If so it seems a bit premature.
 
SlitheryDee said:
Sometimes really big businesses do things that baffle me. Why in the world would they want to get out of a market they are dominating? I mean the PC business, not webos and tablets.

Are they just trying to do this in advance of the ultimate death of the PC? If so it seems a bit premature.
Click to expand...

Their profit margins probably suck on PCs and they aren't making enough money to justify keeping it around.
 
darkewaffle said:
It's weird, like everywhere I look in homes and businesses I see Dells around here, but evidently HP is even bigger. I never see Lenovo either. Are those numbers in the final paragraph global maybe? Though almost every printer is HP that I see.

Crazy how quick they're jumping that ship though. Hard to see it really latching on though, so I guess I see why.
Click to expand...

My current system at work is HP, last company was Dell, one before was Lenovo/IBM (all big companies).


WOW on the Touchpad. That's pretty damn abrupt and quick? Dead product = no support, and most people are probably within their return window... Except early adopters, sucks for them.

With all the Touchpad commercials I've seen, wonder how much they blew on marketing the thing.
 
They say HP is looking to exit the PC business... does that include their business line of desktop/laptops/servers/storage? The article goes on to mention the woes of their consumer line, but nothing about the business/enterprise line of hardware.
 
SlitheryDee said:
Sometimes really big businesses do things that baffle me. Why in the world would they want to get out of a market they are dominating? I mean the PC business, not webos and tablets.

Are they just trying to do this in advance of the ultimate death of the PC? If so it seems a bit premature.
Click to expand...

I was expecting an Onion article when I saw the title. Then I told some of my co workers and they didn't believe me either
 
I know that HP is a huge player in the pc market but as someone who has always built his own pcs I can't honestly say I've seen many HPs.
 
Lifted said:
They say HP is looking to exit the PC business... does that include their business line of desktop/laptops/servers/storage? The article goes on to mention the woes of their consumer line, but nothing about the business/enterprise line of hardware.
Click to expand...

They wouldn't be so stupid to do that. However their server lines and blade enclosures are in big trouble with everybody jumping onboard Cisco's UCS.
 
The CEO is a genius. Why waste so much time with the low profit margins on computers when they can put all that focus on putting out more printers?

$40 printer. $100 ink cartridges.
 
Time to sell the Palm patents to Google and try to recoup the losses, either that or go down the Microsoft and Apple route and slap a lawsuit on everyone.
 
I am surprised they decided not to sink with the dying PC business. Bravo to management for foreseeing the future.
 
Never forget
pre-tattoo-1.png
 
You must log in or register to reply here.

TRENDING THREADS

Back
Top