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HP Restarts Tablet Production

Hewlett-Packard announced on Aug. 18 that it would stop making the tablet and the Pre phones because of weak sales.

NEW YORK (AP) -- Hewlett-Packard Co.'s decision to restart production of its TouchPad tablet is "confusing," a Sterne Agee analyst said Wednesday, but it could improve the value of the webOS software used by the tablet, if HP wants to sell it.

Late Tuesday, HP said it's making one last run of the TouchPad. The Palo Alto, Calif.-based company announced on Aug. 18 that it would stop making the tablet and the Pre phones because of weak sales. It bought the two products along with Palm Inc. last year.

HP then cut the price of the cheapest version of the tablet from $399 to $99 to clear out stock. That caused a run on the TouchPad, and HP said Tuesday that the "stunning" demand inspired the resumption of production.

HP didn't say how many it would make, or what price it would sell them at.

Sterne Agee's Shaw Wu said that at $99, HP probably lost $200 per unit. But making more could help satisfy purchase commitments to supply-chain partners, he noted. Plus, having more devices out there could make the webOS software more valuable to potential buyers, which he believes includes Samsung Electronics Co., Research In Motion Ltd. (the maker of the BlackBerry) and Amazon.com Inc., among others.

HP shares were up 19 cents, or 0.7 percent, at $26.24 in pre-market trading.

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