Analysts Don't Like HP's Recent Decisions

The recent major decisions that HP announced have caused quite the set of ripples, some of which aren't being looked upon very favorably by market observers and financial analysts.

That HP is altogether giving up all TouchPad and phones running webOS is one of the two major steps that were announced recently.

The other one, which we covered in detail here, was that the company intends to spin off its personal computer business.

It turns out that analysts and market watchers don't see these revelations in a favorable light, a fact mirrored in HP's stock plummeted 20% on Friday (August 19).

“While we continue to believe HP holds several valuable assets, we believe they will trade at a discount owing to management’s inability to deliver consistent strategic and financial messaging and results,” wrote Shannon Cross, an analyst with Cross Research.

It is still unclear if the PC unit will be spun off or if HP will just opt to sell it to the highest bidder. What is, on the other hand, more than clear is that the 20% drop in stock value means that shareholders practically lost $12 billion in a single day.

Either way, the main problem cited here is that buying the Autonomy division was too expensive and done at the wrong moment, even if it does have the potential of boosting the presence in the cloud sector.

“HP may have eroded what remained of Wall Street’s confidence in the company and its strategy with a dramatically lower financial outlook, a decision to cease all webOS devices (including the TouchPad) a mere 48 days after the launch, a decision to seek strategic alternatives for its PSG business (aka the #1 PC business in the world), and the seemingly overly expensive acquisition of Autonomy (cue the irony), said Richard Kugele, an analyst with Needham, reports Forbes web-site.

In the meantime, HP has set up a refund program for early adopters of the TouchPad, now that the product sells for so much less than at first ($99).