HP's management are likely not to be idiots. Purchasing Palm (to get hold of WebOS and Palm's considerable mobile device patent portfolio) probably had a couple of speculative justifications.

One of them being the very long shot that they could actually become a mobile platform / device vendor.

The fact that the latter was brought to such an abrupt halt barely weeks after launch shows how much of a deliberate Hail-Mary punt their launch of the WebOS based TouchPad was. With most of the dev work already sunk, they probably reckoned it was worth at least a shot but only as long as they could hit EJECT at the first signs it was going to fail. Initial reviews were not great and sales reportedly followed suit.

The fact they moved so quickly to ice the WebOS business suggests clinical execution of a pre-planned contingency plan rather than abject panic.

The other reasons for purchasing Palm would be to take it off the table from competitors while Palm was on fire (although they still paid a pretty penny for the privilege shows how interested other vendors actually were).

But the real fall-back, money earning reason for buying Palm was for its patent portfolio. Look how much Google just paid for Motorola for the same reason.

Why now? Partly because Touchpad sucked so badly so soon and because Google just bought Motorola. They needed to put the WebOs patents on the market before someone followed Google and did a big patents purchase, and the reputation of WebOS took more beatings in the press, both factors diluting the future WebOS asset value and undermining the point of buying Palm in the first place.

Amid all this speculative strategising they also reckoned that their future in the Post-PC world was only going to get more painful. So they picked up Autonomy in a bid to diversify, again before someone else did.

All of the above points to a board in very stormy seas, floundering certainly, but not idiots. Whether they'll make it to shelter is another question altogether.