December 15, 2017

HP Dumps The PC

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Computer manufacturing giant Hewlett Packard is calling it quits. The world’s largest personal-computer maker, is now exploring a spinoff of its PC business. This sudden change highlights how the market has moved away from the computers that so long dominated the industry, toward software and mobile devices. They also plan to abandon efforts to sell tablets and smartphones that challenged Apple Inc.’s iPad and iPhone.

HP Gets Out Of The PC BusinessSo what’s ahead for HP? Looks like they will be focusing more on the highly profitable software business. They have agreed to buy U.K. software firm Autonomy Corp. for about $10.25 billion, seeking to move further into the higher-profit business of analyzing data for corporations.

This surprising announcement is a strategic about face for HP Chief Executive Leo Apotheker, who took over in November. Mr. Apotheker said in a February interview that being in the consumer businesses like PCs gave HP “an immense competitive advantage.”

In an interview yesterday, Mr. Apotheker said “we need to sharpen our focus,” and that to do so “you need to take significant action.”

Investor reaction to the news sent HP shares down 9% to $26.73 in after-hours trading Thursday, after declining 6% to $29.51 at 4 p.m. on the New York Stock Exchange, amid a broad market selloff.

 

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