by Staff Writers
San Francisco (AFP) Aug 22, 2012
Hewlett-Packard on Wednesday announced a quarterly loss of $8.9 billion as the US computer giant was forced to write down the value of some assets and take hefty reorganizational charges.
"HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds," said Meg Whitman, president and chief executive officer, in announcing results for the fiscal third quarter.
HP was forced to book a loss under accounting rules, to reflect the lower value of some assets. It had previously announced this would be some $8 billion to mark down the value of EDS, a services group it acquired in 2008.
The Palo Alto, California giant, the world's biggest maker of personal computers, also is taking a charge to cover the costs of cutting some 27,000 jobs, or eight percent of its global workforce, by 2014 in a major restructuring.
The move is expected to generate annualized savings of $3.0-3.5 billion for HP, which is struggling amid a move to mobile devices and tablet computers.
Earlier this month, HP said more employees than anticipated were taking early retirement and that the cost of the reorganization would rise to between $1.5 billion and $1.7 billion.
The results unveiled Wednesday showed that excluding the hefty charges, the company showed a profit of $1 per share, slightly better than expected, while revenues were below forecasts at $29.7 billion, a year-to-year drop of five percent.
In the same period a year ago, HP posted a profit of $1.9 billion.
HP also lowered its estimate for full-year earnings to between $4.05 and $4.07 per share.
In after-hours trade, HP rose 2.24 percent to $19.63 on the news, which hinted that the turnaround was on track.
Whitman has vowed to turn the company around after a series of problems including a failed tablet computer and a reversal on plans for its PC unit.
"During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change, and improve the balance sheet," she said Wednesday. "We continue to deliver on what we say we will do."
A former chief executive of eBay and unsuccessful candidate for governor of California, Whitman took the reins at HP in September after her predecessor, Leo Apotheker, was ousted after just 11 months on the job.
A recent survey showed HP increased its share of the global market to 17.2 percent in the past quarter.
But the low-margin PC market has been sputtering amid a sizzling increase in powerful smartphones and the arrival of hot-selling tablet computers such as the iPad.
HP rival Dell said Tuesday profits for its second quarter fell as the US tech firm faced a "challenging" PC market and pursued efforts to shift into areas such as software and cloud computing.
Dell said its net income fell 18 percent from a year ago to $732 million, and lowered its outlook for full-year earnings.
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