The company had previously forecast earnings of 94 cents to 97 cents per share. HP said it now expects third-quarter earnings, excluding one-time items, of about $1.00 per share, compared with analysts' average estimate of 97 cents. Restructuring doesn't help that out," Wu said. "They've got at least 50 percent of their company that's still under pressure.
#HP GOOWILL WRITEDOWN PC#
Wu, the analyst with Sterne Agee, said it will be tough to get sales growing at a healthy clip, noting that about 30 per cent of revenue comes from HP's ailing PC division and at least 20 per cent from its sluggish printer business. The company did not comment on its revenue outlook in its release on Wednesday. Wall Street analysts expect HP's sales to fall 3.4 per cent to $123 billion in its current fiscal year, according to Thomson Reuters I/B/E/S. "Write-offs don't do it," said Fred Hickey, editor of The High-Tech Strategist newsletter.
#HP GOOWILL WRITEDOWN ANDROID#
HP which employs more than 300,000 people globally posted a 31 per cent drop in second-quarter profit and a 3 per cent decline in revenue.Īnalysts said the company's long-term success depends on efforts to rejuvenate its products, such as developing goods that can compete with the likes of Apple Inc's iPads and phones that run on Google Inc's Android operating system. HP also said that it had moved faster than it previously anticipated with plans announced in May to reduce 27,000 jobs, or 8 per cent of its workforce.īecause of this, it raised its estimate of a third-quarter pre-tax restructuring charge to as much as $1.7 billion from its previous estimate of $1 billion.Īs a consequence of the impairment charge and the restructuring charge, HP said it expected to post a third-quarter loss of $4.31 to $4.49 per share. The company is scheduled to release quarterly earnings on August 22 after the closing bell. "Management is undoing the things that Hurd did - overpaying for something that is not right." "Is this a huge write-off? Yes," said Global Equities Research analyst Trip Chowdhry.
The deal was unpopular on Wall Street from the day it was announced in May 2008 as critics questioned whether then-CEO Hurd was paying too dearly for a slow-growing company. "When indicators of potential impairment are identified, companies are required to conduct a review of the carrying amounts of goodwill and other long-lived assets to determine if an impairment exists," HP said in a statement.Īnalysts said that charge confirmed what has long been widely known by investors: HP paid too much for EDS, one of the pioneers of the outsourcing of technology services. HP said it decided to take the $8 billion non-cash charge in its fiscal third quarter ended July 31 following a review prompted by declines in its stock price, changing market conditions and the services division's financial performance. "It is hard for me to get too terribly positive on it." "There are a lot of unanswered questions," said Stifel Nicolaus analyst Aaron Rakers. That's why the stock is up," said Shaw Wu, an analyst with Sterne Agee.īut analysts cautioned that it is premature to say that HP's darkest days have passed, especially because the company did not explain why it raised its outlook for profit, excluding items. Now they said they are going to beat their forecast. "Everybody was expecting them to miss the quarter. HP's stock rose 2.4 per cent to end at $19.41 after the increase in the company's outlook relieved investors, who had been expecting another bad quarter with global IT spending on the wane. In a sign that Whitman's efforts to trim costs and bolster the company's prospects were succeeding, HP on Wednesday raised its quarterly outlook for profit, after excluding one-time items such as the goodwill writedown. HP's stock has lost more than half its value in the two years since CEO Mark Hurd unexpectedly resigned amid a scandal over his relationship with a female marketing contractor. Whitman, the former eBay CEO who took up the computing giant's helm in 2011 to some skepticism about her technology and hardware credentials, is trying to turn around the company.
The world's largest computer maker also plans to replace its head of services, a vast but sluggish division that new CEO Meg Whitman wants to reshape into a stronger competitor to the likes of IBM. Hewlett-Packard Co warned of a mammoth quarterly loss after writing down $8 billion on the value of its services business, most of which it acquired four years ago with its $14 billion purchase of EDS.
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