HP suffers worst loss in at least 20 years

Aaron Ricadela San Francisco

HEWLETT-PACKARD (HP) posted its biggest quarterly loss in at least two decades as demand for personal computers (PCs) and services aimed at businesses slumped, underscoring the turnaround challenge facing chief executive Meg Whitman.

Profit excluding some costs would be $4.05 (R33) to $4.07 a share in the 12 months to October, the US computer maker said late on Wednesday. That is at the low end of a forecast for $4.05 to $4.10 issued in May and below the average $4.08 estimated by analysts.

In the third quarter to July profit excluding costs was $1 a share and sales were $29.7bn. Sales in the PC division slid 10 percent to $8.62 billion.

Including write-downs and retrenchment costs, HP posted a net loss of $8.86bn, the biggest since at least 1989.

Almost a year into her tenure at the helm of the largest PC maker, Whitman is boosting investment in research and development and revamping the PC, printer and enterprise services units.

HP is under pressure from rivals such as Apple in computing devices and IBM among corporate clients.

“HP seems to have lost share in all of the key enterprise segments,” Mizuho Securities analyst Abhey Lamba wrote after the results.

Whitman said the PC market remained weak, and the company was in the “early stages of a turnaround”.

HP fell 5.4 percent to $18.17 before the market opened yesterday. The stock has declined 25 percent this year, compared with a 12 percent gain in the Standard & Poor’s 500 index.

To help revive the PC division, HP planned to release a tablet computer running Microsoft’s Windows 8 software later this year, Whitman said. The device would be aimed mainly at businesses. The company decided to design a tablet that was “desirable” to workers while including security and durability features, rather than trying to take on Apple’s iPad directly, she said.

Whitman is cutting 27 000 jobs over two years and plans to invest in areas including security, cloud computing and data analysis software. She is also dismantling the acquisitions of Electronic Data Systems and Palm. – Bloomberg


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