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HP eats $100 million charge to cover unsold stockpile of TouchPads

post #1 of 80
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HP announced on Thursday that it will take a roughly $100 million charge due to poor sell through of the TouchPad, likely in order to credit Best Buy and other resellers for their unsold inventory.

The company revealed during its quarterly earnings call that it took a $.05 charge per share for the TouchPad, which, given the company's 2.07 billion outstanding shares, amounts to just over $100 million.

The news came amid a bevy of changes announced by HP, including the cancellation of webOS, the potential spinning off of its PC business and the $10 billion purchase of software giant Autonomy Corporation.

Assuming a $400 write-off on each TouchPad unit, the charge would cover close to 260,000 unsold tablets, in line with a recent tip suggesting Best Buy was returning more than 240,000 TouchPads after selling just 25,000. Of course, HP may have taken a smaller write-off per unit, especially given the wide range of distribution outlets where the device was sold.

Resellers would either return the devices to HP for a credit, or could use subsidies from the company to sell stock at fire-sale prices.

Though analysts had expected TouchPad sales to disappoint, HP's decision to kill off the webOS platform on mobile devices surprised Wall Street. The company's decision focus on enterprise software is evidenced in its purchase of Autonomy Corporation and the fact that it is investigating "strategic options" for spinning off or selling its low-margin PC business.



HP CEO Léo Apotheker said Thursday the transition comes after careful consideration about ""what needs to be fixed, what needs to be shut down, and what needs to be separated," admitting that "the tablet effect is real and sales of the TouchPad are not meeting [HP's] expectations."

Year-over-year revenue growth for HP was just 1.5 percent in the most recent quarter. The company's total revenue was $31.2 billion, or $1.10 in earnings per share.



Shares of HP stock closed the day at $29.51, down almost 6 percent, and continued to slide in after-hours trading.

Despite being the world's largest PC maker, HP has struggled to grow profits for its PC hardware unit. The company posted $9.6 billion in revenues and just $569 million in profits for its PC business last quarter.



With operating margins of just 10.46 percent, HP has had a difficult time competing against Apple, which maintains a 30.43 percent operating margin. According to one analysis from June, Apple makes more profit from selling one Mac than HP does from selling 7 PCs.

The TouchPad tablet arrived in July to unenthusiastic reviews. Just one month later, HP slashed its price by $100 after failing to gain traction. However, one analyst has suggested that the discount may have backfired because customers are expecting even further price drops.

post #2 of 80
I'm thinking of buying one. You guys think it will sell for a lot in a few years? As a collector item I mean.
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post #3 of 80
I thought HP had a chance to bring some real competition to Apple. Oh well.
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #4 of 80
it can be accurately said that "the iPad 2 killed the TouchPad." the TouchPad was obviously designed to match the original iPad's hardware. but even Samsung had enough sense to delay the Galaxy for several months once they saw the lighter and thinner iPad 2, so they could come up with something close to it (a little too close, apparently).

but i think HP did the smart thing today. trying to jump into the next gen portable market was a huge blunder by Mark Hurd. it was already too late. iOS and then Android were too well established and Palm OS - as nice as it is - just didn't bring anything really new to the table to leapfrog them. and unlike the other cell phone OEM's, HP didn't have a well established global telco distribution network ready either. nor was/is Apple standing still, as iOS 5 and iCloud will put further distance between the iPad and all the rest.

so HP was smart to bite the bullet and shut it all down, instead of throwing good money after bad.

and WebOS still has real value, probably a lot more than HP paid to buy Palm. thanks especially to Google's panic shopping purchase of Motorola. all the other Android OEM's will now immediately assess the potential to license, or even buy, WebOS so they will no longer have Google as the master of their fate.

so all you WebOS fans, do not despair. you will probably see WebOS again next year running on new smartphones, and maybe tablets, from ... ???
post #5 of 80
Samsung could step in and purchase webOS and make it its own mobile OS.

"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #6 of 80
Quote:
Originally Posted by sheff View Post

I'm thinking of buying one. You guys think it will sell for a lot in a few years? As a collector item I mean.

You're joking right? I wouldn't buy one of these tablets if they were blowing them out for $99.99. In the end, that would still end up being a waste of hundred dollars. I don't know about you, but I could easily come up with a whole list of things that I'd rather spend a hundred dollars on.

I also thought that a "collector's item" usually means that the item would have to qualify as being collectible. As a matter of fact, these TouchPads are so collectible that there are currently hundreds of thousands of them collecting dust in various warehouses with panicky people wondering how they're going to get rid of them.

Then again, there are people who do collect all sorts of junk, so who am I to say? This tablet isn't worth anything, not today, and certainly not in a few years from now.

edit - just noticed your sarcasm.....I have a good excuse for missing it though.........
post #7 of 80
Quote:
Originally Posted by Galbi View Post

Samsung could step in and purchase webOS and make it its own mobile OS.

They have Bada, which already looks promising.
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #8 of 80
Quote:
Originally Posted by solipsism View Post

They have Bada, which already looks promising.

Well yes. But they could bolster the engineering team with what webOS has.

Lets face it, webOS by itself, is a fantastic mobile OS.


Another potential suitor could be Amazon.

Yes, the internet retail store.

They could help make a new Kindle OS.

Amazon has the distribution power, the app environment setup would be a breeze, they have the cloud services going pretty well, also on top of that the retail business too.

"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #9 of 80
I was hoping HP would survive, but I suspected they would get squeezed from the top by apple and the bottom by Google. HP had the most potential to compete with Apple but nowhere to go. I hope for their sake they get their money out of WebOs. Maybe RIM will buy it. RIM seems to be into doing really dumb things. The only smart company that might buy it is Samsung.
post #10 of 80
Quote:
Originally Posted by Galbi View Post

Samsung could step in and purchase webOS and make it its own mobile OS.

Why pay? They could just rip it off for free
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I've accomplished my childhood's dream: My job consists mainly of playing with toys all day long.
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post #11 of 80
Actually, if Google were smart they would buy WebOs at a fire sale price and help their partners transition to WebOS and drop Android and all its woes. That would be a really interesting event.
post #12 of 80
How about those Turkish schools that want to buy tablets? Donate them for cryin' out loud.
post #13 of 80
Quote:
Originally Posted by Galbi View Post

Samsung could step in and purchase webOS and make it its own mobile OS.

What about HTC, LG or Acer?
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post #14 of 80
Quote:
Originally Posted by sheff View Post

I'm thinking of buying one. You guys think it will sell for a lot in a few years? As a collector item I mean.

Wow, I really don't think so. You're better off investing in gold right now.

Edit: Not sure if you were sarcastic.
post #15 of 80
I'm not sure why you all are still so positive about WebOS. Even *if* it is as fantastic as many people still believe, it seems to be a poisoned chalice.

Quote:
Originally Posted by ash471 View Post

Actually, if Google were smart they would buy WebOs at a fire sale price and help their partners transition to WebOS and drop Android and all its woes. That would be a really interesting event.

Quote:
Originally Posted by ash471 View Post

I was hoping HP would survive, but I suspected they would get squeezed from the top by apple and the bottom by Google. HP had the most potential to compete with Apple but nowhere to go. I hope for their sake they get their money out of WebOs. Maybe RIM will buy it. RIM seems to be into doing really dumb things. The only smart company that might buy it is Samsung.

Quote:
Originally Posted by Galbi View Post

Well yes. But they could bolster the engineering team with what webOS has.

Lets face it, webOS by itself, is a fantastic mobile OS.


Another potential suitor could be Amazon.

Yes, the internet retail store.

They could help make a new Kindle OS.

Amazon has the distribution power, the app environment setup would be a breeze, they have the cloud services going pretty well, also on top of that the retail business too.

Quote:
Originally Posted by Galbi View Post

Samsung could step in and purchase webOS and make it its own mobile OS.
post #16 of 80
The people that made them the number 1 PC maker got sick of the crappy quality.
post #17 of 80
Walked into my local Costco this afternoon, past the big display of HP TouchPads in blister packs near the front door. It was a very full display of actual units, not the cardboard pictures you exchange at the checkout for the real thing. I guess Costco isn't much worried that someone will steal these suckers. Wonder how long it'll take them to move the HP display out of the way to make room for more of the Samsung Galaxy, Motorola Xoom, Toshiba Thrive and cheap Vizio tablets no one is buying either.

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post #18 of 80
Quote:
Originally Posted by island hermit View Post

What about HTC, LG or Acer?

If both Palm and HP could not make WebOS a success what makes you think HTC, LG or Acer would do any better?

As a smartphone OS it is dead. Even if someone made another WebOS phone/tablet would people buy it and would developers make apps?
post #19 of 80
I say, dump those tablets on the market for near-free, and let some wacky/cool hobby platform spring up via hacking the things for years to come!
post #20 of 80
HP does make some pcs that are equal to apples. Their z series workstations are pretty much mac pros. Even down to price. If they bring that quality to the rest of their pc's they can ramp up the profit.

I hope they dont sell their pc business.
post #21 of 80
I think HP should collect them all and try to sell them in the Phillippines. They already have that Manny Pacquiao commercial that is pretty good and he is enormously popular there.
post #22 of 80
Quote:
Originally Posted by Orlando View Post

If both Palm and HP could not make WebOS a success what makes you think HTC, LG or Acer would do any better?

As a smartphone OS it is dead. Even if someone made another WebOS phone/tablet would people buy it and would developers make apps?

Get back to me when Google cuts its ties with the rest of the manufacturers.

After what we've seen in tech this week, I think anything is possible.
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post #23 of 80
I really was looking forward to see what the next iteration of the Touchpad would be like. It is sad that HP is throwing in the towel. Does it make sense to cut your losses and quit, or to continue to improve on the product?

The fact that HP pulled the plug on the Touchpad means that they were not very confident of ever making a strong tablet.

We have a new tablet here in India released by Reliance. It costs about a quarter of what the high-end iPad costs. The ad itself made me laugh. It seems to be between 5"-7" and they just show that you can use your finger to swipe through various screens, like browsing, facebook etc. What was hilarious was that the first time the finger swipes the screen, the screen doesn't even change! It is only on the second swipe that it changes.

I'd love to see who would buy that. It runs Andriod. I didn't bother to find out which version.
post #24 of 80
Quote:
Originally Posted by quinney View Post

I think HP should collect them all and try to sell them in the Phillippines. They already have that Manny Pacquiao commercial that is pretty good and he is enormously popular there.

Manny Pac-Man is absolutely one of the biggest assholes in the world today.
post #25 of 80
Quote:
Originally Posted by sheff View Post

I'm thinking of buying one. You guys think it will sell for a lot in a few years? As a collector item I mean.

Maybe if you never take it out of the box. There would still be over 200,000 of them with quite a number of people thinking the same thing you are. If you're under 20 years of age and live to 80 you actually might get twice the price you paid for it. Just joking. I honestly don't think you'll ever get much for it as a collector's item.
post #26 of 80
Quote:
Originally Posted by Mister Snitch View Post

How about those Turkish schools that want to buy tablets? Donate them for cryin' out loud.

Those schools want a tablet platform with a future and support and maybe some other incentives. Supposedly they'll need 15 million tablets over a four year period. The TouchPad is officially out of production. HP is in no position to offer those Turks a tablet that's already end-of-life.

However, maybe there are some schools or institutions that could use those TouchPads, but what about support. I have to say that writing off $100 million in unsold inventory is definitely a franchise-sized foulup. Those other iPad rivals are getting a fair warning of the risk of being stuck with a poorly selling tablet. Companies are going to read articles like this and think twice. It's a scary proposition.
post #27 of 80
Quote:
Originally Posted by sheff View Post

I'm thinking of buying one. You guys think it will sell for a lot in a few years? As a collector item I mean.

There might be some value in 20-30 years, not in five years.

If you already owned an unopened box, you could just keep it and see if Lady Luck treats you well in 2040. A used unit is probably worthless.

That said, I doubt if a TouchPad is a worthwhile investment vehicle. Some tech museum might pay $25,000 for a mint TouchPad, but they'll only want one.

Heck, there's a better chance that a single share of AAPL issued as a paper stock certificate will be worth a lot more in twenty or thirty years.
post #28 of 80
Quote:
Originally Posted by tonton View Post

Manny Pac-Man is absolutely one of the biggest assholes in the world today.

Huh???? You must be confused with Floyd Mayweather. Anyways, I got a chance to play with a TouchPad. I thought it was really good, just too late in the game now against an already 2nd iPad generation.
post #29 of 80
Quote:
Originally Posted by Galbi View Post

Samsung could step in and purchase webOS and make it its own mobile OS.

That would be a smart move. In the end the negative predictions about HP all came true.
HP didn't give it time to be successful, and that's a shame. WebOS deserves better and Samsung needs such an OS.

J.
post #30 of 80
Quote:
Originally Posted by Kibitzer View Post

Walked into my local Costco this afternoon, past the big display of HP TouchPads in blister packs near the front door. It was a very full display of actual units, not the cardboard pictures you exchange at the checkout for the real thing. I guess Costco isn't much worried that someone will steal these suckers. Wonder how long it'll take them to move the HP display out of the way to make room for more of the Samsung Galaxy, Motorola Xoom, Toshiba Thrive and cheap Vizio tablets no one is buying either.

"my Costco" had the Xoom on display for a couple of months....some people touched it, looked at the price and kept going on. Maybe they should not have put it next to the underwear section?
post #31 of 80
Quote:
Originally Posted by jarvijarv View Post

Huh???? You must be confused with Floyd Mayweather. Anyways, I got a chance to play with a TouchPad. I thought it was really good, just too late in the game now against an already 2nd iPad generation.

Not confused at all. The Philippines is an extremely poor country, with over 25% of its population living on less than US$1.25 per day. The cities are horrendously overpopulated, and there are millions of families with handfuls of children living in poverty, having more, and more, and more children.

And Pac-man wants to ban condoms and all birth control in the country.

Asshole extraordinaire.
post #32 of 80
Larry Ellison! That guy jason erlow from zdnet called it!

He hates HP with a passion and would probably throw billions in to webOS to make it successful and prove that Apotheker is incompetent.
post #33 of 80
Quote:
Originally Posted by nagromme View Post

I say, dump those tablets on the market for near-free, and let some wacky/cool hobby platform spring up via hacking the things for years to come!

Brilliant.
post #34 of 80
Quote:
Originally Posted by majortom1981 View Post

HP does make some pcs that are equal to apples. Their z series workstations are pretty much mac pros. Even down to price. If they bring that quality to the rest of their pc's they can ramp up the profit.

I hope they dont sell their pc business.

Too late for that hope.
post #35 of 80
Quote:
Originally Posted by Granmastak View Post

Larry Ellison! That guy jason erlow from zdnet called it!

He hates HP with a passion and would probably throw billions in to webOS to make it successful and prove that Apotheker is incompetent.

Not sure that Ellison needs to prove that anymore.
post #36 of 80
Quote:
Originally Posted by anantksundaram View Post

Not sure that Ellison needs to prove that anymore.

Good point
post #37 of 80
Quote:
Originally Posted by solipsism View Post

I thought HP had a chance to bring some real competition to Apple. Oh well.

Agreed. Believe it or not, this is bad news in the long run for Apple. The reason is that Apple needs good competition to keep them on their toes and spur development, otherwise they will go the way of every other company that has a monopoly, and that is to get bloated, then resort to using lawyers rather than developers to try and maintain that monopoly.
post #38 of 80
Quote:
Originally Posted by jnjnjn View Post

That would be a smart move. In the end the negative predictions about HP all came true.
HP didn't give it time to be successful, and that's a shame. WebOS deserves better and Samsung needs such an OS.

J.

That's my thinking too. Apple are behaving like playground bullies towards Samsung, so taking WebOS to Samsung could result in a more formidable opponent for Apple. This would be a good thing for all concerned as Apple won't get complacent when faced with Samsung hardware running WebOS. Trying to kill Samsung's products will only result in weaker competition and ultimately a weaker Apple.
post #39 of 80
Quote:
Originally Posted by Constable Odo View Post

Those schools want a tablet platform with a future and support

You have no way of knowing that. None.

Maybe what these schools want (need) is to fill a need at the best possible price - the same way they have to fill every other need. And maybe they're aware that support and maintenance means very little. The fact is, the kids will beat the tar out of the tablets (that's just normal) and they'll be obsolete (if they're still working at all) in two years anyway.

Schools buy things that they know have a limited life span ALL THE TIME, because they know what the stuff will have to go through. Price is king for almost every buying decision.

In addition, this will be the schools' first experience with tablets. Mistakes will be made. Make them on cheap machines. The beauty part is, even if they moved up to iPads in a few years, it's not like a company where everyone has to learn new software. Instead, you've got a whole new crop of students every year. If everything's changed, it does not matter.

That's the way the problem actually looks - IF you are really looking at (and dealing with) the problem and not just running your yap on a chat board.
post #40 of 80
Quote:
Originally Posted by AppleInsider View Post


The news came amid a bevy of changes announced by HP, including the cancellation of webOS,



Not this crap again!

This statement is factually inaccurate, and in opposition to what HP has said.
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