Computer and printer maker HP said on Monday it was closing a loss-making software division it bought a year a half ago for $470 million and would concentrate its resources on software systems to manage networks.
HP said in a statement it would focus on software areas where it had market success and owned intellectual property, such as its widely respected OpenView network management tools.
The company declined to say whether it expects to take a charge to cover the cost of the shutdown.
Shuttering the Bluestone division, acquired in an all-stock deal in early 2001, was a blow to the plan by chief executive Carly Fiorina to catapult HP into a new software area.
Now, the number two computer company aims to expand alliances with independent developers such as BEA Systems.
HP`s new head of software, Nora Denzel, said she expected the division to swing to a profit through cost cuts, including job cuts, and revenue gains by remaining software operations.
"I definitely see that next year," she said in a telephone interview. HP would retain its place as the number five software company, she added.
"We do not think that our position will change, and we are nearly a $4 billion software company."
HP is pulling the plug on three middleware platforms, used to glue networks together, including the Bluestone application server platform it purchased and two platforms it developed, the Netaction Web Services Platform and the Web Services Registry.
Despite solid success in some software areas such as OpenView, which monitors networks, HP is an also-ran in many categories, such as application servers.
Palo Alto, California-based HP is revamping itself in the wake of its record-sized merger with Compaq Computer in May, and had said it was considering retiring some middleware, the software that ties together two or more applications or systems.
That was widely expected to mean the end of the Bluestone application server, which sits between personal computers and database applications. HP and BEA recently tightened their alliance for HP to sell BEA`s application server.
Shares of HP closed off 1.77%, or 27 cents, at $15 while BEA rose more than 9% to $8.06.
HP said it would focus on three software areas "where the company has considerable intellectual property and customer acceptance," including OpenView, Utility Data Center, which is another, relatively new management tool, and telecommunications-focused middleware tool Opencall.
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