HP looks to stop selling consumer devices
SAN FRANCISCO - In a dramatic reshuffling, Hewlett-Packard Co. said yesterday that it will discontinue its tablet computer and smartphone products and may sell or spin off its PC division, bowing out of the consumer businesses.
It is one of the most extreme makeovers in the company’s 72-year history and signals new chief executive Leo Apotheker’s most transparent move to date to make HP look more like longtime rival IBM Corp., which now makes most of its money from software and services.
The most apparent result for consumers will be the end of HP’s TouchPad tablet, a sales dud, and HP-branded smartphones, also-rans in a booming market crowded with the iPhone and devices based on Google’s Android system. By the end of next year, HP computers could be sold under another company’s name.
HP will continue to sell servers and other equipment to business customers, just as IBM now does.
It was not immediately known whether any jobs will be cut. HP employs more than 300,000 worldwide.
A decade ago, HP emerged from a bitter fight to spend more than $24 billion on Compaq Computer, setting the stage for HP to become the world’s biggest 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.’’
The PC industry is under pressure from hot-selling smartphones and tablet computers, which have contributed to weak consumer demand for PCs in the United States and Europe.
More striking is that HP plans to shutter its fledgling smartphone and tablet business just two years after spending $1.8 billion 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 said it is in talks to buy Autonomy Corp., a business software maker. Earlier, The Wall Street Journal and Bloomberg News had reported HP planned to buy Autonomy for $10 billion, which would rank the deal among HP’s biggest.
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 are not as labor- or component-intensive as building computer hardware.
HP’s net income rose to 93 cents per share in the fiscal third quarter, from 75 cents a year ago. But a lower-than-expected outlook weighed on the stock. Shares fell 6 percent to $29.51.
