HP shares shed 20% value

Computer giant is paying 64% above market value for Autonomy software

Tags: HPMergers and acquisitions
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HP shares shed 20% value HP has shed 20% of its market value following its announcement that it is ditching its hardware business to focus on software. (Getty Images)
By  Georgina Enzer Published  August 21, 2011

Hewlett-Packard has lost momentum in the market following the announcement that it is buying UK software firm Autonomy and is likely to sell its consumer hardware business, according to the BBC.

Shares in the computer giant slumped by 20% on Friday following the shock announcement that HP's business will now focus on software and services and that it will be shedding its PC, smartphone and tablet computer business.

HP's $11.7bn offer for Autonomy, which has been accepted by Autonomy's board, is 64% above the firm's market value.

HP is the world's largest PC vendor, but by 2012, its consumer hardware is likely to be being sold under another name.

HP will continue to sell servers and other equipment to business customers, following the path taken by IBM in 2005, sidelining PC hardware in favour of more profitable software and services.

HP's Chief executive Leo Apotheker wanted the company to challenge Apple in the consumer software market, but realised this was not possible.

With shrinking consumer hardware profit margins, HP has instead decided to focus on the more profitable computing for business segment.

The purchase of Autonomy underlines this new direction. Autonomy is pushing hard in the business of business intelligence and analytics and focuses on solutions for the growing big data problem.

On Thursday, HP announced quarterly results with revenues of $31.2bn, up 1.6% from a year earlier.

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