Hewlett Packard May Lose $300 Million On TouchPad

Posted Aug 23, 2011

Hewlett-Packard Company (NYSE:HPQ) may lose about $300 million on the HP TouchPad. As you know by now, Hewlett Packard had a fire sale of the tablet device as they are preparing to phase out the webOS. HP dropped the TouchPad tablet by about 75% or more.

HP launched the TouchPad device on July 1st. According to reports, HP ordered between 500,000 and 1 million units of the TouchPad for its first order from their Taiwan-based contractor.

According to iSuppli, the 16GB version of the TouchPad costed $305.65 to build and the 32GB version of the TouchPad costed $328.65. If HP received the full 1 million unit orders of the TouchPad, then the company spent roughly $317.7 million to build all of them. About 50,000 of those unit orders in stores were sold at the initial higher price, which means that HP had to eat up $297.7 million in unsold TouchPad units just based on hardware costs. HP also paid quite a bit in other operating and marketing costs.

If HP sells all of their TouchPads at the lower price, then they will eat up about $150-$200 million in losses. Last year HP reported$126.3 billion in net revenue.