HP Stock Drops 6 Percent Thursday After It Announces Plan to Sell PC Business

HP confirmed Thursday ahead of its late-day earnings webcast that it was seeking a buyer for its computer, tablet and mobile business. It said its board had authorized “the exploration of strategic alternatives” for its Personal Systems Group (PSG), which could include a “full or partial separation of PSG from HP through a spin-off or other transaction.” PSG’s portfolio includes PCs, mobile products, client virtualization and connected entertainment solutions, Internet services and support for consumers, small- to mid-sized business and enterprise customers.

HP also said it will scrub operations for webOS devices including the TouchPad, launched in July, along with webOS phones. The company said it would continue to “explore options to optimize the value of webOS software going forward."

HP confirmed it is in talks to buy Autonomy, a U.K.-based commercial software company, a deal industry sources have valued at $10 billion. HP revenues for the third quarter ended July 31 were an estimated $31.2 billion, compared with $30.7 billion in Q3 2010, HP said. Diluted earnings per share were $0.93, compared with $0.75 for Q3 2010, it said. For Q4 2011, the company forecasts revenue of approximately $32.1 billion to $32.5 billion. It cut its forecast for full-year fiscal 2011 revenue to approximately $127.2 billion-$127.6 billion from its previous estimate of $129 billion-$130 billion.

HP, which began shipping the $499 TouchPad tablet last month, hoped to jumpstart sales of the tablet with an initiative called “Top Gun” (CED July 11 p3) in which it has stationed HP employees at exclusive TouchPad kiosks at 100 Best Buy locations. DisplaySearch said at the time that having trained staffers marketing the TouchPad, a program that was scheduled to run through the end of the year, would “help HP differentiate its TouchPad from the other tablets sold in Best Buy stores and help consumers better understand what the TouchPad offers compared to notebooks and smart phones.” DisplaySearch also said that while retailers had been making efforts to differentiate product categories such as tablets and smartphones, “they are still challenged by having to distinguish tablets from each other.” The research firm said that as more brands with incompatible operating systems entered the tablet market, “things could potentially get more confusing for consumers."

IHS iSuppli reported in March that HP held its position as market leader in PCs with a 19.4 percent share for Q4 2010. Its share grew 4.6 percent from Q4 2009, IHS said. HP stock dropped nearly 6 percent Thursday to close at $29.51.