Hewlett-Packard reported an $8.9 billion (£5.6 billion) loss for its fiscal third quarter - easily the worst in the tech giant's 73-year history - and management warned that the company's struggles could persist into 2013.
"HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds. 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," HP CEO Meg Whitman said in a statement on Wednesday.
HP reported revenue of $29.7 billion (£18.7 billion) for its third quarter, down 5 per cent from the $31.2 billion (£19.7 billion) it pulled in during the same period in 2011, and a whopping EPS hit of $4.49 (£2.83) to investors. The company suffered sales declines in all of its core business units except Software, which saw revenue grow 18 per cent, albeit not organically - HP's $10 billion deal for Autonomy, completed last October, contributed significantly to that growth.
The Silicon Valley computing giant, in the midst of restructuring and downsizing initiatives designed to adjust to a faster-paced, more mobile technology landscape, had warned investors earlier in August that it would be taking an $8 billion (£5.04 billion) charge associated with its 2008 acquisition of Electronic Data Systems (EDS). HP bought the IT services firm founded by Ross Perot for $13 billion (£8.2 billion) under then-CEO Mark Hurd, who resigned in 2010 in the wake of a scandal involving fudged expense reports and allegations of sexual harassment by an HP marketing contractor.
Whitman, who succeeded the ineffectual Leo Apotheker as president and CEO last September, has vowed to turn HP around but has consistently warned that the process could take years. The former eBay boss and one-time California gubernatorial candidate inherited a company bloated by a decade-long spending spree under Carly Fiorina and Hurd, with Apotheker rounding out HP's era of big-ticket acquisitions with the Autonomy deal.
In 2001, Fiorina merged HP with Compaq in a much-criticised deal that eventually made HP the biggest PC maker in the world. Hurd, seeking to take on rivals like IBM and Cisco with a complete portfolio of business IT products and services, brokered the deal for EDS in 2008, bought 3Com for $2.7 billion (£1.7 billion) in 2009, and acquired Palm for $1.2 billion (£760 million) in 2010. Last year's spectacular failure of HP's first consumer tablet running Palm's webOS mobile software means the first and last of those deals have now contributed directly to some of the most embarrassing episodes in HP's history.
HP's ongoing downsizing initiative also contributed to the record loss. In May, the company announced plans to lay off approximately 27,000 employees, or 8 per cent of its workforce, as part of a multi-year restructuring plan that will extend to the end of 2014.
Though the EDS write-down represented most of HP's quarterly loss, severance payments for the first wave of pink slip recipients helped push it to nearly $9 billion (5.67 billion), according to the Associated Press.