Score another victory for Apple. Faced with a major cut in its full-year sales outlook, beleaguered computer company Hewlett-Packard (HPQ) is throwing in the towel on its effort to grab market share in the tablet and smartphone market.
Shares of the company initially surged Thursday on the announcement of its plans to acquire Autonomy Corp. for $10 billion and spin off its personal computer business. However, the company’s downward revision in its full-year fiscal year 2011 estimates sent shares into a freefall.
HP now estimates that its 2011 revenues will end up in the $127.2-$127.6 billion range, down from earlier estimates of $129-$130 billion. Earnings per share are expected to range from $3.59 to $3.70, substantially down from earlier estimates of $4.27.
HP’s efforts to crack the tablet market, dominated by Apple’s iPad, have borne no fruit. The company’s attempt to enter this market involved billions of dollars in spending, including the acquisition of Palm. HP’s answer to the iPad, the TouchPad, has failed to meet revenue goals.
"The tablet effect is real and sales of the TouchPad are not meeting our expectations," said HP CEO Leo Apotheker on a conference call Aug. 18. "The velocity of change in the personal device marketplace continues to increase as the competitive landscape is growing increasingly more complex, especially around the personal computing arena. There's a clear secular movement in the consumer PC space. The impact of the economy has impacted consumer sales and the tablet effect is real.”
Shares of Hewlett-Packard fell 19 percent in pre-market trading based on the news.
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