HP posts huge loss

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HP posts huge loss

HP has recorded a net loss of $US8.9 billion ($A8.5 billion) for Q3 this year, a figure it attributed to a $US10.8 billion charge related to its EDS services business as well as its ongoing restructuring.

The tech giant reported net revenue of $US29.7 billion, down 5 percent from the prior-year period, and net earnings of $US2 billion, down 14 percent from 2011.

HP acquired US outsourcing giant EDS (Electronic Data Systems) in May 2008 for $US13.9 billion, renaming it HP Enterprise Services. HP said in early August it expected to write down $US8 billion from its services division this quarter.

It also predicted its ongoing restructuring, which involves the loss of around 8 percent of its workforce - or 27,000 jobs - would cost more than expected. 

'Still early'

The company-wide restructure was initiated following the appointment of new CEO Meg Whitman late last year, after a difficult 2011 which saw the dumping of CEO Leo Apotheker, confusing messages regarding the possible sale of its PC division, and the sudden axing of its much-touted TouchPad tablet.

"HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds," Whitman said today.

"During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organisational change, and improve the balance sheet. We continue to deliver on what we say we will do."

Most of HP’s core divisions were down in its third fiscal quarter, with its PSG (personal systems group) suffering the most.

PSG revenues were down 10 percent to $US8.6 billion, while services revenue fell 3 percent to $US8.8 billion. The services division took over PSG as the company’s most profitable business unit for the quarter.

HP’s imaging and printing group felt a 3 percent drop in revenue to $US6 billion, with ESSN down 4 percent to $US5.1 billion and financial services down 2 percent to $US935 billion. Software was HP’s saving grace in the quarter, growing 18 percent to record revenue of $US973 million.

HP shares dropped 4.7 percent to $US18.30 in after-hours trading. It is currently trading at $US19.20. The stock was valued at $US24.54 this time last year.

HP is pinning its hopes on Microsoft’s upcoming Windows 8 operating system, in recent weeks touting its own credentials and claiming its Windows 8-run products will be the best in the market.

HP is one of the many PC makers slated to release Windows 8 devices following the OS’ launch in October. An unknown tablet appeared in HP’s marketing materials in the last month, giving credence to its announcement of an x86 enterprise-focused tablet in the works. 

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