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HP posts massive third quarter loss after service business write-down

Meg Whitman

Palo Alto, California: HP, the printers to consulting conglomerate, reported the biggest quarterly loss in its history today, on declining revenues, as it struggles with a barrage of competitive pressures and restructuring issues.

  • Third quarter net revenue down 5% at $29.7 billion
  • Net loss of $8.857 billion
  • $8 billion write-down in services business

    HP said that for its third fiscal quarter to July 31, 2012, net revenue was $29.7 billion, down 5% year on year and down 2% when adjusted for the effects of currency.

It recorded a net loss of $8.857 billion in the quarter, compared with net earnings of $1.926 billion in the same quarter last year.

Most of the loss was incurred from an $8bn write-down in its services division, which is dominated by the former EDS services group, bought for $14bn in 2008. HP has put a new interim management team in place to lead the business.

"HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds," said Meg Whitman, HP president and chief executive officer.

"During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change, and improve the balance sheet. We continue to deliver on what we say we will do."

Services revenue declined 3% year over year with an 11.0% operating margin. Technology Services revenue was down 1% year over year, Application and Business Services revenue was flat, and IT Outsourcing revenue declined 6% year over year.

Software revenue grew 18% year over year with an 18.0% operating margin, including the results of Autonomy. Software revenue was driven by 2% license growth, 16% support growth, and 65% growth in services.

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