Meg Whitman is cleaning up more of Hewlett-Packard Co.’s big, complicated house.
On Wednesday the company said that it would be taking an accounting charge of $8 billion related to its 2008 acquisition of Electronic Data Systems Corp. for $13.9 billion. It also said that it would take a charge of $1.5 billion to $1.7 billion related to layoffs announced last May. HP had originally projected a charge of $1 billion in cutting some 27,000 jobs from its workforce of nearly 350,000, but said more workers took early retirement than it expected.
As a result of the charges, Hewlett-Packard said it would report a record loss of nearly $9 billion, or between $4.31 and $4.49 a share, when it announces third-quarter results on Aug. 22. Without the charges, the company said, it would have earnings of $1 a share, up from earlier projections of 94 cents to 97 cents.
Whitman, who became chief executive last September, also replaced the head of HP Enterprise Services, the business that absorbed EDS. That executive, John Visentin, had been named to the job a year ago by Leo Apotheker, Whitman’s predecessor. The new head of services is Mike Nefkens, an EDS veteran.
The same day that Apotheker named Visentin to head services, he also said he was buying the British software company Autonomy for $10.6 billion, and was thinking about selling Hewlett-Packard’s personal computer business, the world’s largest. The stock fell sharply, leading to Apotheker’s resignation. Under his tenure HP lost about $30 billion in market capitalization.
HP shares have fallen another 19 percent since Whitman took over, leaving it with a market capitalization of $38.34 billion. That drastic drop in the value of the company is one reason that HP was led, by accounting rules, to take the write-down for EDS.
Few appear to be calling for the resignation of Whitman, however, who has said it will take several years to turn the company around. Since taking charge, Whitman has announced that HP will keep its PC business, and has consolidated top management.
When Hewlett-Packard bought EDS in May 2008, it said EDS would give it a way to go after IBM in the services business, and noted that the combined revenues of HP and EDS would be $38 billion. In its last fiscal year, Hewlett-Packard services had revenue of just $35.9 billion. Most of that business was in low-margin outsourcing deals, with little of the profitable consulting services fees that power IBM.