Hewlett-Packard shares plunged 20 percent on Wall Street today after the world’s top personal computer maker announced a dramatic strategic shake-up that includes spinning off its PC business.
Shares in HP lost 20.03 percent to close at $23.60, wiping more than $12 billion off the Palo Alto, California-based firm’s market capitalization.
HP shares, which shed 5.99 percent on Thursday, are trading at their lowest levels in six years.
HP announced Thursday it was exploring a spin-off of its PC unit, or Personal Systems Group (PSG), and buying British enterprise software company Autonomy for $10.24 billion as it refocuses on software and technology solutions.
In a further move away from the consumer space, HP said that it was stopping production of its TouchPad tablet computer, its rival to Apple’s iPad that was introduced just seven weeks ago, and phones based on the webOS mobile operating system acquired from Palm last year for $1.2 billion.
Deutsche Bank analysts said the HP moves raised “red flags” and recommended that investors sell the stock.
Credit rating agency Standard & Poor’s said meanwhile that it was placing HP’s ‘A’ corporate credit rating and ‘A-1’ short-term rating on CreditWatch with negative implications.
Moody’s Investors Service changed the long-term and short-term ratings outlook of HP to negative from stable.
Management is so important. Ever since former CEO Mark Hurd “resigned”, the company has been going downhill and unable to keep up with the competition. Let’s hope they get back on the right track again soon but this is not looking good. The Dow is taking a beating due to HP’s transition.