HP reports huge quarterly loss
Hewlett-Packard Co reported a loss of $8.85 billion this evening after a massive writedown of the value of its services business, most of which was related to its purchase of Electronic Data Systems Corp (EDS).
The world's largest PC maker said net revenue in the fiscal third quarter fell 5 per cent to $29.7 billion, slightly below the average Wall Street estimate of $30.1 billion.
It took a charge of $10.8 billion, mostly related to the writedown of its services business, which it had announced earlier this month.
HP, which like smaller rival Dell Inc is struggling to offset faltering PC sales with services revenue, posted a net loss of $4.49 a share in its fiscal third quarter that ended July 31st, versus a profit of $1.9 billion, or 93 cents a share, a year earlier.
Excluding items such as the writedown, it earned $1 a share, outstripping Wall Street's target of 98 cents. The stock was trading up 2.3 percent at $19.66 in after hours, from a close of $19.20 on the New York Stock Exchange.
The company, which employs more than 300,000 people globally, is undergoing a multi-year restructuring that includes reducing its employee base by 8 per cent. Chief Executive Meg Whitman has urged investors to be patient as she works to jumpstart revenue and cut costs.
"HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds," Whitman said in a statement. "During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change, and improve the balance sheet."
HP said it expected to earn $4.05 to $4.07 per share for fiscal year 2012, which is in the range of Wall Street expectations.
It bought Texas-based technology outsourcing company EDS in 2008 for $13.9 billion. It was once owned by automaker General Motors, one of the pioneers in outsourcing, for more than a decade before it was spun off in 1996.