Hewlett-Packard offered to buy British software company Autonomy for $42.11 a share, or $10.2 billion.
The company may also spin off its PC unit and said it will discontinue the WebOS-based TouchPad tablet computer and phones.
The company, which was expected to report earnings after the bell, delivered its results an hour early. The second-quarter results hit expectations but its outlook disappointed.
Its shares were briefly halted pending the news, then fell when they resumed trading.
The tech giant said its fiscal third-quarter earnings excluding items rose to $1.10 a share from $1.08 a share a year earlier.
Revenue rose to $31.2 billion from $30.7 billion a year ago.
Analysts had expected earnings of $1.09 a share on revenue of $31.2 billion, according to Thomson Reuters.
The company's outlook fell short of expectations: HP projected earnings excluding items of $1.12 to $1.16 a share for the fiscal fourth quarter and revenue of $32.1 billion to $32.5 billion. The earnings include about 61 to 68 cents a share in restructuring costs.
Analysts are expecting earnings of $1.31 a share on revenue of $34 billion for the fiscal fourth quarter.
Shares of HP, a storied Silicon Valley icon that dominates the personal computing industry, were briefly halted pending the news, then fell about 7 percent following the announcement.
The company is expected to announce a long-rumored spinoff of its PC division, the world's largest. A spinoff of HP's PC arm would confirm speculation that has swirled for months that HP was no longer keen on keeping a business struggling with low growth and single-digit margins.
The company plans to announce the spinoff after the market's close, the sources told Reuters on condition of anonymity.
HP and Autonomy were not available for comment. HP Chief Executive Leo Apotheker, a former chief of European software giant SAP AG
Cambridge-based Autonomy counts Procter & Gamble among a long list of major corporate customers that use its software to search and organize unstructured data like emails. Last month, it posted a 16 percent jump in quarterly sales-driven demand for Internet-based cloud computing.