H-P’s bad tablet debut could color results

When Hewlett-Packard Co. Chief Executive Léo Apotheker stated earlier this twelve weeks how the institution would not start its tablet until it experienced been “perfect,” some attendees believed he would afterwards regret those people words.


On Thursday, when H-P reviews its fiscal 3rd quarter, traders may maybe understand how imperfect the TouchPad critically is, a minimum amount of in relation to sales. Just last week, H-P minimize costs by $100 for the TouchPad, which experienced been priced on par with Apple Inc.’s iPad.

“It’s not carrying out any substantially better than each of another aggressive tablets are carrying out in opposition to Apple,” stated Ken Dulaney, a Gartner Inc. analyst. “People just want an iPad.”

The TouchPad was just introduced on July 1, so this look at may appear harsh. correct after all, the much-anticipated tablet has only been for the marketplace place for just about any thirty days with one another with a half. So H-P’s fiscal 3rd quarter, which ended in July, will only consist of the earliest thirty days of sales.

But the TouchPad is “definitely tracking below their expectations,” authored Brian Marshall, a Gleacher & Co. analyst, in an e-mail Tuesday. “I think they have goals of three to 5 million models this twelve weeks and so are not on pace to strike that mark at this point, in my view.”

Marshall described the worth cuts for the system getting a system to “stimulate demand,” however it goes on to be unclear once the movement worked. previous due Tuesday, AllThingsD reported that most effective purchase Co. /quotes/zigman/219712/quotes/nls/bby BBY -5.37% is sitting on the pile of unsold TouchPads, and how the electronics store has marketed much lower than 10% of its products on hand of 270,000 units. research AllThingsD weblog article on H-P.

An H-P spokeswoman declined to comment for the report. The institution stated in the assertion that it “continually evaluates pricing” for its software and lowered costs for the TouchPad getting a lasting extension of is back-to-school promotion.

Apple’s iPad, traders may remember, marketed a few of million models in much lower than sixty times for the marketplace place correct after its April 2010 launch. Just last quarter, the institution stated it marketed an even more 9.25 million iPads.

“Apple is real difficult to beat on this area,” stated Dulaney, within your understatement in the week. Apple controls substantially over 90% in the so-called tablet market, which could be nonetheless critically an apple ipad market.

H-P’s TouchPad utilizes its individual webOS working system, developed by Palm. Previously headed with a past best Apple hardware engineer, Jon Rubinstein, Palm was purchased by H-P in 2010 for $1.2 billion and hopes have been huge that H-P could revive Palm’s sagging fortunes.

While Apotheker and his team have supposedly left the Palm institution alone to create new smartphones and tablets, as well as finesse and enhance the webOS software, some latest software have not been properly received, specifically the TouchPad. The Wall path Journal’s Walt Mossberg stated the TouchPad “is merely no fixture using the iPad. It suffers from bad battery life, a paucity of apps as well as other deficits.” research substantially more of Mossberg's review.

Rob Enderle, an analyst using the Enderle team agreed, additional how the TouchPad is “buggy” and has hardware that is typically a movement at the rear of Apple. There is “no compelling goal to purchase it over an iPad,” he authored in an email.

It’s not obvious whether or not H-P will disclose the system income to day through its conference call, but correct after the company’s worth cut, expectations have been lowered. Some analysts wish that income from tablets may also help offset forecasts of the quarter-to-quarter decline in PC sales.

Of course, H-P’s cell institution will not be atop investors’s ideas on the moment, offered its relatively tiny dimension in comparison using the relaxation in the company. Keith Bachman, a BMO money marketplaces analyst estimates H-P will market about 1.5 million tablets in fiscal 2012, adding $675 million in income — a pile up within your bucket for just about any institution he estimates will create $132 billion in complete fiscal 2012 revenue.

But the weak debut is making some concern about how the acquisition have been handled, and how Apotheker and his team are allocating resources. In his stock options downgrade Wednesday, Bachman brought up the oft-floated idea of H-P spinning away the PC business, but noted it will be difficult to acquire that done. research substantially more on H-P’s downgrade.

Kevin Hunt, an analyst with Auriga USA, carries a preserve rating on H-P, calling its shares a “classic worth trap.”

“The tablet start appears to acquire a failure at this point,” he authored in the note. “The level of R&D and marketing commit that is getting burned there may be also a valid query on the way forward.”

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