HP To Sell Off PC Division

This week, investors have made it clear to the computer giant Hewlett-Packard that plans to get out of the personal-computer business left serious questions about the technology company‘s strategy. Company shares plunged 20% Friday to $23.60, erasing about $12 billion in market value, and leaving the stock near six-year lows.

The event occurred when officials from Hewlett-Packard announced to reporters on Thursday that the company would be looking to sell off the personalized PC side of the business, effectively being the world’s largest share. The company would also be shelling out $10 billion to purchase a British software developer Autonomous.

PC growth and profit margins were below all of the company‘s other businesses, and getting rid of that business will let Hewlett-Packard focus on high-margin software and services, said Basu Mullick, a managing director at Neuberger Berman. However, he questioned the abrupt way the CEO announced the new strategy. “Their communication definitely is not right, the way that they’re handling it,” he said. “Obviously don‘t talk about it before you do it.”

Another worry is Autonomy deal’s price tag; Hewlett-Packard is paying an 80% premium for the British firm. It is paying more than $10 billion for a company with only about $1 billion in annual revenue.

However, despite all record sales in the technology side of the market, some analysts worry that the PC division of Hewlett-Packard if sold may not be able to stay competitive with other large competitors such as Acer without a big brother corporation to bundle items with and purchase hardware in bulk.

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Park Sae-jin swatchsjp@ajunews.com