HEWLETT-PACKARD’S shares have lost more than a quarter of their value in two days as investors take fright over the timing and scale of a strategic overhaul by one of the world’s largest technology companies.

The company stunned shareholders with simultaneous announcements late on Thursday that it was likely to spin off the world’s best-selling personal computer line, pull the plug on tablet computing, make its largest software acquisition and re-evaluate a range of other assets.

Shares in the group, founded in 1939, plunged 20 per cent to $23.80 in midday trading yesterday, accelerating a decline of 6 per cent the previous day as word leaked of the shake-up.

Léo Apotheker, chief executive, told the Financial Times, that he was making “difficult decisions” to commit the company to high-margin business software with the planned $11 billion purchase of Autonomy, the UK’s biggest software company.

The move to spin off or sell the personal computer business that consumers most closely associate with Hewlett-Packard would unlock value depressed by slim profit margins and an uncertain future for a fast-changing sector, he said.

But investors recoiled at the company’s admissions that it faced challenges on so many fronts.

It cancelled projects arising out of last year’s $1.2 billion acquisition of Palm, the smartphone pioneer, which gave it software for new tablets and phones that it had trumpeted just months ago as its competitive answer to Apple.

Some analysts praised the basic strategy espoused by Mr Apotheker, who had run SAP, the German business software giant, before joining HP nine months ago.

They said that software was more valuable than commoditised PCs.

However, the acquisition and spin-off plans were "coming from a position of weakness rather than strength", said Morgan Stanley analyst Kathryn Huberty. – (Copyright The Financial TimesLimited 2011)