HP posts mega-loss after EDS writedown

SAN FRANCISCO,. Thu Aug 23, 2012 – Hewlett-Packard Co. swung to an $8.9 billion quarterly loss as personal computer sales shrank again and it swallowed a huge write-down linked to its $13.9 billion purchase of Electronic Data Systems Corp.

The company also on Wednesday reduced its full-year earnings outlook slightly to the low end of its previous range, responding to a faltering PC market as well as touch economic conditions in Europe and also China, where growth too is slowing. Its shares slid more than 4 percent in late trading.

The No.1 personal computer maker, which employs more than 300,000 people globally, is undergoing a multi-year restructuring aimed at focusing the sprawling corporation on enterprise services, in the mold of IBM. The plan calls for reducing its employee base by 8 percent.

HP will have gone through about half of its targeted job reductions by the end of the fiscal year, HP’s Chief Financial Officer Cathie Lesjak said in an interview. It cut 4,000 jobs in fiscal third quarter and will likely have shorn 11,500 jobs by end of fiscal 2012, she said.

“HP is definitely showing progress in terms of turning around the company,” said Sterne Agee analyst Shaw Wu. “One of the clear signs is a better predictability of earnings.”

The company was plagued by poor forecasting during former CEO Leo Apotheker’s brief tenure.

CEO Meg Whitman has urged investors to be patient as she works to jumpstart revenue and cut costs.