Multi-Billion Hewlett-Packard Loss is Sign of the Times

September 8, 2012

I can across some surprising news today while browsing The Inquirer about a worrying financial situation for Hewlett-Packard. In the article, “HP’s EDS Write-Off Hides Deeper Problems,” we learn that apparently servers, networking, and even ink sales are down. But the $8.9 billion third quarter loss is mostly attributed to the write-off of its purchase of Electronic Data Systems from General Motors in 2008.

The article informs us about the company’s situation:

“For HP, the only ray of light was its software business, to which [former CEO] Apotheker added the British based Autonomy. Given that many thought that HP had overpaid for Autonomy when it shelled out over $10bn last year for a company that barely makes $250m in profit a year, there could well be another write-down in the future unless HP does a better job of integrating the firm than it did with EDS.”

All but one of HP’s business units saw a decline in revenue, so the focus should likely be on more than just the mismanaged purchase of EDS. We think this serious problem is being masked by multi-billion dollar write-offs. It is apparent that server and PC vendors are all having trouble distinguishing themselves from the cloud crowd, and not even established brands are safe.

Andrea Hayden, September 08, 2012

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