News

HP announces huge shift in strategy

Possible spinoff of PC business bows to mobile-device future, would reverse Compaq deal

In a dramatic strategy shift that left investors shaken, HP announced Thursday (Aug. 18) it is considering a spinoff of its PC business to focus on business software.

The world's largest PC maker announced at the same time it will acquire the British software company Autonomy.

HP said it will discontinue its webOS phones and new TouchPad tablet, which has been available for just a few weeks. The products have not met internal milestones or financial targets, the company said.

A spinoff of the PC business would amount to a reversal of HP's acquisition nine years ago of Compaq.

"HP is implementing a plan to fundamentally transform the company," the firm said in a statement.

The move was seen as an acknowledgement of the decreasing relevance of PCs as consumer preferences shift to mobile devices.

"It's Day 1 of the transformation," CEO Leo Apotheker, who joined HP last September, told the Wall Street Journal, acknowledging "difficult decisions" that had to be made in a search for better performance.

— Palo Alto Weekly staff

Comments

Like this comment
Posted by The-Internet-Is-Disruptive
a resident of Another Palo Alto neighborhood
on Aug 19, 2011 at 10:30 am

Interesting. HP's (reasonably) new management has taken stock of the past, present and (likely) future of the company, and decided to redefine the company to be more productive, more profitable, and maybe even to avoid some future shifts in the economic ecosystem of the US/World that might see HP going out of business.

What's interesting about this turn of events, is that while the HP folks over on Page Mill seem to think that they can turn their large organization in a significantly different direction than it is proceeding at the moment, we have the almost moribund local governments (effectively run by labor unions), and local downtown merchants clinging to a rapidly disappearing memory of the 1950s, not able to comprehend what is going on, nor being able to do anything about it but call for "more taxes".

The difference in the two worlds, just a mile apart, couldn't be clearer. HP will probably be around in the future. The local folks who don't seem to want to live in the 21st century .. probably not.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Aug 19, 2011 at 10:50 am

> .. effectively run by labor unions), and local downtown merchants clinging
> to a rapidly disappearing memory of the 1950s, not able to comprehend
> what is going on, nor being able to do anything about it but call for "more taxes".

LOL, very imaginative.


Like this comment
Posted by flop
a resident of Adobe-Meadow
on Aug 19, 2011 at 11:45 am

HP is making one mistake after the other. How long can they stay in business? Do they have any real successful products besides PC printers?


Like this comment
Posted by Jon
a resident of Another Palo Alto neighborhood
on Aug 19, 2011 at 11:49 am

Internet-Is -Disruptive, you are on to something. If someone was to look at the impact of the last 3 years (the largest economic downturn since the 1930's) on the staffing or budget of the city, it's mind boggling how insulated they are. Where are the city council on this ? Why no "benchmarking" against other local cities ? Even PAUSD does that....


Like this comment
Posted by Ronald L.
a resident of Downtown North
on Aug 19, 2011 at 12:17 pm

Three words: Walter was right.


Like this comment
Posted by musical
a resident of Palo Verde
on Aug 19, 2011 at 1:12 pm

Ouch. One leg of my retirement stool just got 20% sawed off.


Like this comment
Posted by It figures
a resident of Palo Verde
on Aug 19, 2011 at 7:25 pm

Carley F. was wrong - as many suspected back then.
She eventually go fired, but got lots of $$


Like this comment
Posted by Alan
a resident of Stanford
on Aug 19, 2011 at 9:47 pm

I can understand HP getting out of the PC business which is a commodity, but to dump webOS and the table just shows that the people at the top have no vision or guts.

People are shift massively away from PC to table and smart phone. For HP to give up the ghost of this shift to try and be what IBM was 15 years is just stupid. webOS is a very good architecture, and if they found the right currently unexplored niche (webOS on you TV) they could make good money.


Like this comment
Posted by Sharon
a resident of Midtown
on Aug 19, 2011 at 10:55 pm


HP declares a strategy to get into services 10 years to late.

IBM and Oracle dominate this space and HP has no chance.

HP has a geriatric CEO and a dysfunctional Board of Directors--the share holders should fire all of them.

HP was built upon innovation--not as a me- too, wannabee follower.

HP has now made a bet so big that it will never be able to bet again when it looses --

This is the wrong strategy, too little , too late, too old and too stale.

HP shares are down 20% today and they will be in free fall by Monday.


Like this comment
Posted by flop
a resident of Adobe-Meadow
on Aug 20, 2011 at 7:21 am

Hewlett-Packard sums up worst of Corporate America: Web Link


Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Aug 20, 2011 at 12:30 pm

Walter_E_Wallis is a registered user.

Selling ink couldn't sustain them forever. Eventually the 3rd party suppliers would eat their lunch.


Like this comment
Posted by James Hoosac
a resident of another community
on Aug 20, 2011 at 4:59 pm

Before buying Compaq HP's market cap was $37B. Compaq's was $24B. Since then HP also bought EDS for $13B, and some other smaller ones.

$37 + $25 + $13 = $75B.

Today HP's market cap is less than $50B.

1 + 1 + 1 = ??


Like this comment
Posted by galen
a resident of Ventura
on Aug 20, 2011 at 7:36 pm

This is a sad day for HP. I worked for HP from 1980 till 1999 and i loved it. There were lots of wonderful people and HP made some great, innovative products. HP hasn't done anything lately other than be late to the party and poorly dressed. For the largest tech company in the world and number one PC-maker to decide it can't compete is mind-boggling to me. What happened? HP has lost its way and it breaks my heart to see it. The entire board and Leo need to go.


Like this comment
Posted by Paul Losch
a resident of Community Center
on Aug 21, 2011 at 6:35 am

Google acquires a hardware company--Motorola

HP announces it is effectively exiting the hardware business

All in the same week

Go figure


Like this comment
Posted by Old Palo Alto
a resident of Old Palo Alto
on Aug 21, 2011 at 6:43 pm

A piece of advice to career HP employees: Diversify your retirement money out of HP stock if you can.


Like this comment
Posted by HP Way
a resident of Old Palo Alto
on Aug 22, 2011 at 9:37 pm

A parody about what happened

Web Link


Like this comment
Posted by sellit
a resident of Green Acres
on Aug 22, 2011 at 9:50 pm

Sell it to Chinese government.


Sorry, but further commenting on this topic has been closed.

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