Hewlett-Packard has posted a quarterly loss of $8.9 billion after a gigantic writeoff of its services division’s value, as it struggles to cope with fall-ing revenues in other core areas including PCs and printing.
Its CEO, Meg Whitman, warned that “we are still in the early stages of a turnaround” as she told analysts that it will be a long slog to return the Silicon Valley pioneer to growth.
HP had indicated earlier in August that it would take an $8 billion charge against the shrinking value of the services firm Electronic Data Systems it bought in 2008 for $13 billion.
But total revenues fell by 3.6% to $8.7 billion, and operating income by 6% to $3 billion. The biggest drops came in the Personal Systems Group, the world’s largest PC business, where revenues fell by 10% and income 28%, and the enterprise servers and storage group, where revenues fell by 5% and income 20%.
The printing business, also the world’s largest, saw revenues fall, though profits improved slightly.
HP’s woes reflect those of Dell, the world’s third-largest PC maker, which earlier this week reported dramatically slowing revenues and profits, and blamed a slowdown in consumer and enterprise spending-- a trend it does not expect to improve in the next quarter.
Whitman, the third CEO in two years, took over 11 months ago.
The stock has lost more than half its value in the past two years.
She acknowledged “the very serious executive issues” facing HP as it tries to catch up to its rivals and cope with a weak economy, particularly in Europe, which is reeling under crisis.