Shares in Hewlett-Packard slumped by more than a fifth to a six-year low early on Friday, a day after the world's biggest PC maker signaled a major shake-up in its business and cut its annual forecast.

The decline wiped some $14.5 billion off the company's market value.

Shares of HP fell to $22.76 in heavy early morning trading, making it the biggest loser on the New York Stock Exchange. The broader S&P 500 Index fell nearly 1 percent.

With a forward 12-month price-to-earnings ratio of 5.6, the company is trailing its peers, including Dell, Apple and IBM according to Starmine SmartEstimate.

Excluding losses on Thursday and Friday, HP's stock has lost nearly a fifth of its value since the world's largest PC maker reported second-quarter results on May 17.

On Thursday, the company said it may spin off its PC business and also cut its outlook and said it will buy British software company Autonomy Corp to boost its cloud business.

At least two brokerages downgraded the Palo Alto, California-based company's stock, and five analysts cut their price targets, mainly citing the uncertainty and expenses that will accompany the company's restructuring.

HP is undergoing a sound strategy transformation by focusing on high-growth, high-margin opportunities in the enterprise/commercial markets, Gleacher and Co wrote in a note and cut its price target to $39 from $50.

However, we materially underestimated the magnitude and timing of this metamorphosis, i.e. IT service margin decline, challenged storage growth.

HP has already stopped production of its WebOS-based devices like its TouchPad tablet, which failed to score with buyers.

Cypress Semiconductor Corp -- the main supplier of touch controllers for TouchPad -- will also hurt if the company pulls the plug on the product, brokerage Collins Stewart said.

Cypress' shares fell 3.3 percent to $16.59 on Friday.

HP, which for years represented everything Silicon Valley, has been struggling with its once hugely popular PC business, as niftier gadgets like Apple's iPad eat into its market.

Thursday's weak forecast follows smaller rival Dell's lowered revenue outlook earlier this week that dragged down both stocks.

Both companies have been venturing out of traditional comfort zones and into enterprise solutions and services, but continuing soft sales have been a constant source of trouble.

Last night HP may have eroded what remained of Wall Street's confidence in the company and its strategy, Needham & Co said in a research note.

Brokerage Robert W. Baird said HP is no longer a safe haven stock and expects it to lose market share.

HP's decision to spin off the PC business reflects commoditization, as consumers change the use of computers, and this may hurt Intel, the world's largest supplier of PC chips, brokerage Nomura said in a note.

A reversal in average selling prices would remove a key revenue driver over the last six quarters (for Intel).

(Additional reporting by Rachel Chitra; Editing by Don Sebastian and Joyjeet Das)