Beleaguered Hewlett-Packard to take record quarterly loss of nearly $9B

“Hewlett-Packard Co. on Wednesday said that it will take a massive charge against its earnings for the latest quarter, leading to a record loss of nearly $9 billion,” The Associated Press reports. “The charge is the result of a writedown of the value of its services business, reflecting that the company overpaid for when it bought Electronic Data Systems in 2008 for $14 billion. HP said it will take an $8 billion charge for the reduced value of Enterprise Services in the quarter that ended in July. The division, which provides information technology and outsourcing services to corporations, has seen flat revenue for the last two years, and its operating profit has declined.”
AP reports, “The Palo Alto, Calif. company said the charge and other accounting adjustments will lead to a loss of $4.31 to $4.49 per share. That works out to about $8.5 billion to $8.9 billion. In the last 15 years, HP has only posted one quarterly loss. The charge comes as CEO Meg Whitman is trying to turn HP around. The company’s main businesses, PCs, services and printers, are stagnant or shrinking. Whitman, the former CEO of eBay, took over in September… The restructuring, announced in May, is expected to slash 27,000 jobs, or 8 percent of HP’s work force, by 2014. It’s the largest downsizing in the company’s history.”

“The computer company also said the head of Enterprise Services, its second-largest division, is leaving ‘to pursue other interests,’” AP reports. “John Visentin will be replaced on an interim basis by Mike Nefkens, currently the head of Enterprise Services in Europe, the Middle East and Africa.”

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