Hewlett-Packard absorbed the largest quarterly loss in its history as the Silicon Valley pioneer owned up to past mistakes that have left it scrambling to adapt to a shifting technology market.
The loss of US$8.9 billion ($10.8 billion) announced yesterday did not come as a surprise.
HP telegraphed the news this month when it disclosed plans to take a US$8 billion charge to reflect the shrinking value of Electronic Data Systems, a technology consulting service it bought for US$13 billion in 2008.
It also had to absorb charges to cover severance payments for the first wave of the 27,000 workers it is jettisoning to slash its expenses as its revenue shrivels.
The company, based in Palo Alto, California, now expects to drop 11,500 employees from its payroll by the end of October.
This adds 2500 jobs to its previous target of 9000.
Another 15,500 employees will lose their jobs by October 2014.
The cutbacks are driven by the rising popularity of mobile phones and tablet computer devices, which is reducing demand for personal computers.
That has been bad news for HP, which is the world's largest maker of PCs and printers.
To cope with the upheaval, it has been expanding into technology consulting, computer software, data storage and high-end servers for companies and government agencies.
All are more profitable than the fiercely competitive PC market, but HP hasn't been evolving rapidly enough to avoid a downturn in its financial performance.
The downturn has battered its stock, which has lost more than half its value in the past two years.
Like several other large technology companies, HP has also been hurt by the recent economic turmoil in Europe.
The uncertainty caused by unwieldy government debt in Europe has curbed spending on the continent.
"Make no mistake about it, we are still in the early stages of a turnaround," HP chief executive Meg Whitman told analyst during a conference call.
That has become Whitman's mantra since HP hired her as chief executive 11 months ago.
She has been shaking things up at HP by reorganising divisions, installing new managers and slashing costs through the job cuts.
As Whitman's commentary on a conference call made it clear that HP's struggles are far from over, more investors bailed out of the company's stock.
HP shares fell US34c, or nearly 2 per cent, to US$18.86 in extended trading, reversing earlier gains after the results were released.
The fiscal third-quarter loss translates to $4.49 a share. The company made US$1.9 billion, or US93c per share, at the same time last year.
HP's revenue sank 5 per cent from last year to US$29.7 billion. That was about US$500 million below the projections of analysts polled by FactSet.
It marked HP's fourth consecutive year-over-year quarterly decrease in revenue.
Whitman's clampdown on expenses also appeared to be delivering savings more quickly than Wall Street anticipated.
If not for the company's various charges, HP said it would have earned US$1 per share.
That figure was US2c per share above analyst estimates.
- AP
