HP takes $8 billion writedown on services arm
The company also shook up executive leadership for the struggling services division
IDG News Service - Hewlett-Packard said Wednesday that it would take an $8 billion charge in its third fiscal quarter owing to weakness in its enterprise services division.
The writedown is technically for "the impairment of goodwill" associated with HP's services. In the financial world, "goodwill" refers to intangible assets such as brand strength that are taken into account when determining a company's total value.
"Recent trading values of HP's stock, coupled with market conditions and business trends within the Services segment" necessitated the move, HP said in a statement.
HP greatly increased its services business with the 2008 acquisition of EDS for $13.9 billion, a deal that has been viewed as overly expensive.
In the same announcement Wednesday, HP said that Mike Nefkens, senior vice president and general manager of Enterprise Services EMEA, will serve as acting head of the whole division. He will report to CEO Meg Whitman.
Enterprise Services chief John Vistenin is leaving HP "to pursue other interests," the company said. Vistenin was appointed services head during the tenure of former HP CEO Leo Apotheker, who had a short, rocky run at the company and was replaced with Whitman in September 2011.
Jean-Jacques Charhon, formerly senior vice president and chief financial officer of the services group, has been appointed chief operating officer for the division, HP announced. His role will center on "increasing customer satisfaction and improving service delivery efficiency."
HP also said that it would incur a higher than expected charge in the third quarter related to a staff reduction plan announced earlier this year, due in part to "a higher than anticipated acceptance rate under its early retirement program." The company is anticipating a pre-tax charge of between $1.5 billion and $1.7 billion, up from the initial $1 billion estimate.
Also Wednesday, HP said third-quarter earnings are expected to come in at about $1 per share, an increase from its previous forecast of $0.94 to $0.97, if calculated under non-GAAP (generally accepted accounting principles) with those one-time charges set aside.
The company's shares were up $0.46 on the news to $19.42 in late trading, indicating some approval from investors for HP's moves and the adjusted third-quarter forecast, but the stock is still well down from past highs.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com
- Best iPhone, iPad Business Apps for 2014
- 14 Tech Conventions You Should Attend in 2014
- 10 Desktop Apps to Power Your Windows PC
- How to Add New Job Skills Without Going Back to School
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
Red Hat Enterprise Linux - The Original Cloud Operating System
Linux adoption is growing against a number of measures, such as the
number of supercomputers that run Linux and the size of the contributing...
- OpenStack Hype vs. Reality: CIO Quick Pulse Open-source architecture can enable IT departments to build infrastructure-as-a-service (IaaS) clouds running on standard hardware.
- Future Focus: What's Coming in Enterprise Mobility Management (EMM) Find out why Enterprise Mobility Management (EMM) solutions that are truly future-ready must be designed to enable Machine-to-Machine (M2M) capabilities and much more.
- The CIO's Guide to Enterprise Mobility Management (EMM) This guide will help those making an EMM platform decision make the best choice for their organization.
- Live Webcast Increasing the Value of Your Reports and Dashboards Learn how incorporating other analytical capabilities such as predictive modeling and visualization can increase the value of your reports and dashboards by providing...
- Testimonial: Cystic Fibrosis Trust Peter Hawkins, the Head of IT for Cystic Fibrosis Trust, discusses the role CommVault's Simpana software platform plays in improving the company's information...
- Increasing the Value of Your Reports and Dashboards Learn how incorporating other analytical capabilities such as predictive modeling and visualization can increase the value of your reports and dashboards by providing... All Management White Papers | Webcasts