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HP bowing out of tablet and smartphone business

The tech company is also reportedly considering selling off its PC division…

HP CEO Leo Apotheker holding one of HP's Elitebooks in March 2011.
HP CEO Leo Apotheker holding one of HP's Elitebooks in March 2011.
Image: AP Photo/Paul Sakuma

IN A DRAMATIC reshuffling, Hewlett-Packard Co said today that it will end its tablet computer and smartphone products and may sell or spin off its PC division, bowing out of the consumer businesses.

It’s one of the most dramatic makeovers in the company’s 72-year history and signals new CEO Leo Apotheker’s most transparent move to date to make HP look more like longtime rival IBM Corp.

A decade ago, HP emerged from a bitter fight to spend more than $24 billion (€16.7 bn) on Compaq Computer, setting the stage for HP to become the world’s number one maker of personal computers. Now, three CEOs later, HP is changing course — hard.

The PC division is HP’s biggest revenue generator but least profitable division. The move has long been rumored, but just six months ago HP dismissed reports of the possibility as “irresponsible reporting” and that PCs are “core to HP’s strategy for the connected world.”

Pressure

The PC industry is under pressure from hot-selling smartphones and tablet computers, which have contributed to already weak consumer demand for PCs in the US and Europe.

More striking is that HP plans to shutter its fledgling smartphone and tablet business just two years after spending $1.8 billion (€1.25 bn) on smartphone maker Palm, which gave HP the webOS software that has been praised by critics but largely been ignored by the marketplace. It is here that HP was the victim of the Apple and Google juggernauts, as iPads and iPhones and smartphones running Google’s Android software have been hot sellers, while HP devices have languished.

HP also announced that it is in talks to buy Autonomy Corp, a business software maker. Earlier, The Wall Street Journal and Bloomberg News had reported that HP planned to buy Autonomy for $10 billion (€6.97 bn), which would rank the deal among HP’s biggest.

The decision to buy Autonomy also marks a change of course for HP, one that makes HP’s trajectory look remarkably similar to rival IBM’s nearly a decade ago. IBM, a key player in building the PC market in the 1980s, sold its PC business in 2004 to focus on software and services, which aren’t as labour- or component-intensive as building computer hardware.

HP also announced its latest quarterly results an hour earlier than planned.

An HP spokesman did not return a call from The Associated Press.

HP shares fell $1.36 (€0.95), or 4.4 per cent, to $30.01 (€23.02) in afternoon trading.

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