UPDATED 16:28 EDT / AUGUST 18 2011

Hewlett-Packard Splitting up after Earnings Call Shocker

Hardware giant Hewlett-Packard reported fairly flat Q3 results,  and took the opportunity to make some major announcements regarding the company’s outlook and brand.

HP reported revenue of  $32.1 billion, up from $30.7 billion a year ago but still well bellow Wall Street’s expectation of $34 billion. It was on par with the company’s own prediction of $31.1 billion to $31.3 billion, though.  Non-GAAP profit in the third quarter stood at $1.10 a share, just topping analysts’ average forecast of   $1.09.

As for the outlook:

“For FY Q4, the company sees revenue of $32.1 billion to $32.5 billion and non-GAAP profits of $1.12 to $1.16; the Street has been projecting $34 billion and $1.31.

For the full fiscal year ending in October, the company now sees revenue of $127.2 billion to $127.6 billion, down from a previous estimate of $129 billion to $130 billion.”

These numbers have not appealed to HP’s investors, considering the stock is down five percent at $29.82, and management is taking some major pushes to try and overhaul the company.  First and foremost, the company said it is considering to spin-off the Personal Systems Group, its PC business.  This will have an enormous impact on the HP brand name as well as on the consumer end should this be carried out, and may slow down growth even further.

Secondly, it seems that webOS has not been doing so well. HP stated it will stop shipping devices powered by the mobile platform, meaning that Palm – the original developer of webOS acquired by Hewlett-Packard – may be put up for sale sometime soon.  This also means that its plans to install webOS on all of its products, from printers to PCs, have probably been dissolved.

Lastly, the company confirmed that it is in talks to acquire enterprise search and data management solutions vendor Autonomy.

Hewlett-Packard is pushing for two things with its cloud, software and enterprise initiatives: to further branch out beyond hardware, and increase its margins. Now that it gave up on PSG and Palm, it is likely there are going to be some layoffs in these businesses as the company restructures once again.


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