HP, the largest technology company in the world by revenue, will continue to sell servers and other equipment to business customers, just as IBM now does. Those businesses currently don't generate as much revenue for HP as PCs, but they have higher profit margins.
HP employs more than 300,000 people worldwide.
“Apple single-handedly knocked HP out of the PC, smartphone and tablet business,” Gleacher & Co. analyst Brian Marshall said in an interview.
HP decided to whittle its competition to the other business technology specialists — namely, IBM, Oracle Corp. and Cisco Systems Inc., Marshall said.
Apotheker spent most of his career at German business software maker SAP AG, another company that catered to the technology needs of companies and government agencies.
The results were overshadowed by HP's announcement that it plans to spin off its PC business and stop selling its webOS tablet and mobile phones. HP's stock fell another $2.90, or nearly 10 percent, to $26.61 in extended trading. The company earned $1.93 billion, or 93 cents per share, in the latest quarter. HP's revenue climbed less than 2 percent to $31.2 billion from $30.7 billion. HP said its software revenue rose 20 percent to $780 million, and its services revenue climbed 4 percent to $9.09 billion, while revenue in its printer segment fell 1 percent to $6.09 billion and revenue in its personal systems group, which includes PCs, fell 3 percent to $9.59 billion.
For the current quarter, HP forecast adjusted earnings of $1.12 to $1.16 per share, below analysts' average expectation for $1.32 per share. This comes a year after HP spent $1.2 billion buying Palm and its webOS business, so HP could have its own operating system and build its own developer ecosystem, instead of using Windows. Chief Executive Leo Apotheker — who joined Palo Alto, Calif.-based HP in November after a career at business software giant SAP — is playing to Wall Street and converting HP into a higher-margin, enterprise company.
It looks like he's copying IBM, which sold its PC business to Lenovo in 2004 so it could focus on business servers, software and services.
Carly Fiorina abandoned HP's storied culture and laid off thousands to appease Wall Street. Hurd also named Netscape co-founder Marc Andreessen to HP's board in 2009.
Now, by turning HP into an enterprise software company like IBM and Oracle, Apotheker's making HP even more of a competitor with Microsoft.
The planned PC spinoff and Autonomy purchase were announced along with HP's earnings during the third quarter. HP netted $1.9 billion on sales of $31.2 billion — a 9 percent increase in profit over the same period the year before and a 1 percent increase in sales. Its release noted that consumer sales were down 15 percent, and its business sales were up 5 percent.
HP presumably will sell its PC business to one of the Asian manufacturers.
HP's doing just that, but investors responded Thursday by ditching its stock: It fell 6 percent in regular trading and an additional 10 percent after hours to $26.61.