Tired of selling low-margin PCs, and with its tablet and smartphone offerings failing to catch on, H-P unveiled a massive change in its strategy - abandoning its consumer efforts to focus on software and services for businesses.
Hewlett-Packard's strategy shift involves three major changes:
- The company plans to abandon mobile computing altogether. It will stop making its Touch Pad tablet, which debuted just two months ago, and the Pre smartphones it acquired when it purchased Palm Inc. last year for $1.2 billion. H-P said it may try to salvage the WebOS that runs its mobile devices, also acquired in the Palm deal, by licensing it to other vendors.
- H-P will sell or spin off its PC division, which accounts for about a third of the company's revenue but less than a quarter of its profits.
- H-P will buy Autonomy Corp. PLC (PINK ADR: AUTNY) for $11.7 billion. The U.K.-based company specializes in business software that can search data such as emails, music, video and social media posts.
"What they're trying to do is change the oil in the car at 60 miles per hour," Needham analyst Richard Kugele told USA Today.
Investors expressed their displeasure by dumping H-P stock, and accelerating on Friday. HPQ lost almost a quarter of its value shortly after the announcements Thursday afternoon, falling to $23.60 from its Wednesday closing price of $31.39.