HP boosts Q3 revenue forecast, warns of $8B write-off
updated 01:22 pm EDT, Wed August 8, 2012
Service segment fails to take off
HP has revised its third-quarter financial outlook, boosting revenue expectations but cautioning of an $8 billion write-off due to lackluster performance in its services division. The struggling group, only four years in the making, is already set for restructuring and a change in leadership.
Enterprise Services head John Visentin will be leaving the company to "pursue other interests," though such language is often used when an executive is asked to leave. The company has promoted an insider, Enterprise Services EMEA senior vice president Mike Nefkens, to take the reins. Jean-Jacques Charhon was also bumped from his position as division chief financial officer to serve as the new chief operating officer.
The existing services division is the product of HP's $14 billion acquisition of Electronic Data Systems in 2008, while Mark Hurd served as company CEO. The write-off suggests HP is reevaluating the group as worth a fraction of the original acquisition price.
The lackluster performance in the services group contrasts with enterprise hardware sales, which represented the strongest segment in HP's Q2 financials. The company is also struggling to maintain revenue in its consumer divisions, as modest gains in desktop PC shipments failed to counter a drop in notebook sales and a particularly steep falloff in printer revenue.
HP earlier this year announced layoff plans that will displace 27,000 employees by the end of the company's fiscal 2014. The workforce reductions are claimed to be necessary to enable the company to invest in what it views as profitable ventures, such as cloud and security products.
