HP shares plunge twenty per cent on Wall Street

Hewlett-Packard shares plunged twenty per cent on Wall Street on Friday when the world's prime pc maker announced a dramatic strategic shakeup that has spinning off its laptop business.

Shares in HP lost twenty.03 per cent to shut at $23.60, wiping over $12 billion off the Palo Alto, California-based firm's market capitalization.

HP shares, that shed five.99 per cent on Thursday, are trading at their lowest levels in six years.

HP announced Thursday it had been exploring a derivative of its laptop unit, or Personal Systems cluster (PSG), and shopping for British enterprise software company Autonomy for $10.24 billion because it refocuses on software and technology solutions.

In a any move removed from the buyer house, HP said that it had been stopping production of its TouchPad pill pc, its rival to Apple's iPad that was introduced simply seven weeks ago, and phones based mostly 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 counseled that investors sell the stock.

"We believe this strategic analysis has the potential to be very disruptive to the conventional course of business," Deutsche Bank said.

"In mixture, we tend to question the timing of parallel strategic actions (acquisition and laptop spinoff) within the midst of a meaningful deterioration in HP's core operations and lowered steerage," it said.

Shaw Wu of Sterne, Agee & Leach expressed concern that HP "may be stretched skinny attempting to try to to too several things at an equivalent time as well as its purchase of Autonomy, shutdown of its webOS hardware operation, to not mention handling the uncertainty around its laptop business."

Credit Suisse said HP's moves were "fundamentally" the proper strategy however warned that "it's reaching to be expensive."

Gregori Volokhine of Meeschaert Capital Markets said variety of HP's past acquisitions are "disastrous" and noted that the corporate is basically jettisoning Palm's webOS platform but eighteen months when shopping for it.

"They wish to become an immediate competitor of SAP, IBM and Oracle," Volokhine said of HP's strategic shift. "Those are massive players."

Credit rating agency normal & Poor's said meanwhile that it had been inserting HP's 'A' company credit rating and 'A-1' short-term rating on CreditWatch with negative implications.

"The Personal Systems cluster is HP's largest unit from a revenue perspective and has rock bottom margin of HP's business segments," normal & Poor's credit analyst Lucy Patricola said.

"Although the separation of this unit can be incrementally positive to straightforward & Poor's analysis of HP's overall business profile, the monetary impact might doubtless be important, counting on the structure of any transaction and on the ensuing HP capital structure," Patricola said.

Moody's Investors Service modified the long-term and short-term ratings outlook of HP to negative from stable.

"The negative outlook reflects a level of performance uncertainty stemming from HP's important strategic announcements," Moody's said.

"HP are financing an outsized transaction and considering strategic choices for its ancient laptop business throughout what can be a amount of considerable economic volatility," it said.