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HP Posts Giant Loss Due to EDS Impairment Charge

By - Source: HP | B 18 comments

Write downs and restructuring charges of $10.8 billion drove HP's third quarter result deep into the red.

The company reported revenue of $29.7 billion for the most recent quarter, down about 5 percent sequentially. The loss for the quarter was $8.9 billion.

A large chunk of the loss was due to an impairment charge related to the company's acquisition of EDS (technology consulting service Electronic Data Systems) for $13 billion in 2008. in the services segment, which HP adjusted by about $8 billion, as well as another $1 billion related to the Compaq brand. HP also spent about $1.8 billion to lay off and send about 4,000 employees into early retirement (a similar move took place in 2008, while the company decided to buy many former employees back out of retirement, which are now sent into retirement again). The company warned that it may not be done with its write downs and there may be more write downs for the current quarter.

Excluding all one-time charges, HP reported a better than expected net profit of $2.0 billion, which led CEO Meg Whitman to describe the result as an "overall decent quarter". She noted that HP is making progress on its turnaround, but projects the process to take several years.

Revenues in all four major business segments (Personal Systems; Services; Imaging and Printing; Enterprise Servers, Storage and Networking) declined during the quarter. Especially noteworthy are Whitman's comments on the PC market, which she described as "weak". According to the executive, "channel inventory is high across the industry ahead of new product releases," which does not bode well for the company with a vide on Windows 8 and the need to clear out its inventory to sell new systems.

"The reality is we're locked in serious, competitive battles, but we're determined to win," Whitman said. "We will fight to sustain our leadership position, particularly in the Commercial space, while remaining focused on profitable growth. To this end, we are executing targeted marketing and promotional programs to support the business in Q4."

For the current quarter, HP expects revenue to continue to decline.


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  • 0 Hide
    lamorpa , August 24, 2012 1:11 PM
    HP Posts Giant Loss Due to Rudderless Mediocrity.
  • 0 Hide
    Anonymous , August 24, 2012 1:18 PM
    The best I ever did was to quit EDS in mid 2008, right before the HP acquisition.
  • 9 Hide
    Pinhedd , August 24, 2012 1:23 PM
    lamorpaHP Posts Giant Loss Due to Rudderless Mediocrity.


    HPs consumer products are mostly junk but their business hardware is quite nice. Their enterprise hardware is outstanding and simply won't quit.

    If HP made their laptops like they make their servers their name would be much better
  • Display all 18 comments.
  • 1 Hide
    4745454b , August 24, 2012 1:53 PM
    Oddly enough I have a business HP and HP era compaq laptop. Both quite good. Can't say the same for my IMB laptop however.

    Was never sure about the EDS merger. Not everyone can be Dell/IBM. Or should be.
  • 5 Hide
    lamorpa , August 24, 2012 2:00 PM
    PinheddHPs consumer products are mostly junk but their business hardware is quite nice. Their enterprise hardware is outstanding and simply won't quit.If HP made their laptops like they make their servers their name would be much better

    I agree. I went to a 2-day business and server product presentation in Fort Collins. Impressive. Now they've got to get their consumer product stuff that well designed and made.
  • 8 Hide
    hate machine , August 24, 2012 2:14 PM
    Ill second HP Enterprise pcs being awesome. Nice attractive designs and the internals are robust.
  • 4 Hide
    waxdart , August 24, 2012 2:33 PM
    I downloaded printers. sorry.
  • 1 Hide
    bietapico , August 24, 2012 2:37 PM
    My sister purchased a HP Pavillion V6 for 1000 euros...the CPU temp when there are no running tasks is between 80-82C..took it to HP and they told her that even 90C were fine, imagine. To my surprise, googled overheating problems for V6 series and it seems that there were many customers with the same problem. I never liked HP (printers specially) but I see their laptops are equally bad, bye HP.
  • 2 Hide
    cookoy , August 24, 2012 2:37 PM
    Hope this is not a recurring nightmare for past bad decisions made by their top executves. Some of their printers and noteboks feel really cheap. Too bad.
  • 2 Hide
    Agges , August 24, 2012 3:20 PM
    Pretty sure this is billion "$29.7 million" ...

    It seems that Meg Whitman is cleaning up the ranks and the newest products are pretty solid engineering.
  • 0 Hide
    slabbo , August 24, 2012 4:05 PM
    HP was really well known for their scientific tools and electronic equipment. Those were top notch stuff, they should go back to their roots and invent more useful stuff to advance mankind and not pander around with crappy PC's stuff. Their calculator department need a kick in the pants too. Those calculators used to be the best, now it's just expensive crap.
  • 1 Hide
    tntom , August 24, 2012 4:11 PM
    HP has improved there laptop quality a good bit. But only in the face of competition and raised customer expectations from Apple. HP's printers are junk in my mind. I have never had one that did not have problems feeding paper. All my Epsons have been rock solid but they use super high performance nozzles in the print heads that clog when you use cheap ink. There is such a mix of good and bad at HP. WebOS should have been a success but they rushed it with to many features too fast before they had hardware to support the software.
  • 0 Hide
    captaincharisma , August 24, 2012 4:25 PM
    yea sure HP it this and not that you make crap computers
  • 0 Hide
    joebob2000 , August 24, 2012 5:19 PM
    Quote:
    HP also spent about $1.8 billion to lay off and send about 4,000 employees into early retirement


    That's $450,000 per person. What happened to the good old days of just f*****g firing someone?
  • 0 Hide
    svdb , August 24, 2012 8:20 PM
    slabboHP was really well known for their scientific tools and electronic equipment. Those were top notch stuff, they should go back to their roots and invent more ...
    Have you not noticed they removed the word "invent" from their logo?
  • 0 Hide
    svdb , August 24, 2012 8:23 PM
    joebob2000That's $450,000 per person. What happened to the good old days of just f*****g firing someone?
    Hopefully some day you'll get fired the way you say.
  • 1 Hide
    A Bad Day , August 24, 2012 9:07 PM
    bietapicoMy sister purchased a HP Pavillion V6 for 1000 euros...the CPU temp when there are no running tasks is between 80-82C..took it to HP and they told her that even 90C were fine, imagine. To my surprise, googled overheating problems for V6 series and it seems that there were many customers with the same problem. I never liked HP (printers specially) but I see their laptops are equally bad, bye HP.


    90 C is fine because by the time the lappy dies from overheating, the warranty would've expired.
  • 0 Hide
    captaincharisma , August 29, 2012 3:11 AM
    Quote:
    I agree. I went to a 2-day business and server product presentation in Fort Collins. Impressive. Now they've got to get their consumer product stuff that well designed and made.


    yea that will happen the day linux replaces windows as the top OS