In a shocking turn of events, following the purchase of Autonomy, HP have announced that they are set to quit the tablet PC and Smartphone business resulting in their newly released HP Touchpad, being sold at extremely discounted prices.
HP's future plans focus on the selling of software and as their shares fell 20% in the first week of the purchase, trading to close at $23.58, this has proven to be quite an expensive month for HP. Acquiring the global leader in technology Autonomy for £7.1bn ($11.7bn), which is 64% above the firm's market value, we ask are HP biting off more than they can chew?
Overhauling a business
HP announced that their quarterly revenue results were $31.2bn (£18.9bn), so really £7.1bn shouldn't have been too much of a stretch. The BBC has intimated that HP computers could be sold under another company's name by the end of the year. At the time analysts were saying that "the move underscores Apple's dominance in smartphones and tablets with its iPhone and iPad products". However, with the resignation of Steve Jobs, could this be the breathing space HP need to stabilise their newly formed venture?
By leaving behind extreme profit margins and concentrating on profitable-computing for businesses they may not need to worry about this.
Autonomy has been experts in the business intelligence and business analytics for some time, and there is still scope for ample growth in the market. Coming from a legal IT background to me, Autonomy's reputation precedes them, which is why I for one am personally not concerned by the purchase, or HP wanting to concentrate on one topic rather than become a 'Jack of all trades'.
Autonomy who claims to be leaders in computing and enterprise search, was founded in 1996 borne out of Cambridge University. Cambridge, UK and San Francisco hold the dual headquarters as well as other offices around the world. It is a global leader in infrastructure software.
Overall due to global economic climate issues, and with the recent downturn of the stock market, investors are going to be wary when changes such as these occur. After the resignation of Steve Jobs this week, Apple's shares decreased, even though he is a figurehead and the product is as strong as ever, but is HP opting out of the tablet PC market a bad move?
On the revenue front no it is not because with Autonomy in the forefront there will always be quality work, especially as both companies are well known in the private and public sectors. The only downfall that is prominent here is if the tablet PC market continues to thrive, and HP would need to, or like to, go down that route once again - they would have a lot of ground to make up. Time will tell.
More information about the acquisition can be found on the official HP website.