HP Services takes $8 billion charge from EDS deal
HP is expecting higher-than-anticipated costs for its planned restructuring
Hewlett-Packard has said it expects to write down $8 billion from its Services division during its fiscal third quarter, a move that stems from its $13.9 billion acquisition of EDS in 2008.
HP has also announced that John Visentin, who last August replaced the retiring Tom Iaonotti as head HP of Enterprise Services, is leaving the company ‘to pursue other interests.'
Mike Nefkens, the London-based senior vice president and general manager of the EMEA branch of HP Enterprise Services, will replace Visentin on an acting basis, HP said.
HP also named Jean-Jacques Charhon, senior vice president and CFO of HP Enterprise Services, as COO of the division. He will be tasked with increasing customer satisfaction and improving service delivery efficiency, HP said in a statement.
In HP's second quarter, Services division revenue dropped 1% year-over-year with an 11.3% operating margin.
EDS, renamed HP Enterprise Services in 2009, was led by longtime HP executive Ann Livermore until her ouster last June. Last May, ex-CEO Leo Apotheker moved Technology Services out of Enterprise Services and into HP's Enterprise Servers, Storage and Networking division.
HP is also expecting higher-than-anticipated costs for its planned restructuring, which will include the slashing of 27,000 jobs, about 8% of its workforce by the end of its fiscal 2013 year next June.
HP now expects its restructuring to result in a third-quarter charge of between $1.5 billion and $1.7 billion, up from its earlier forecast of $1 billion, due to the unexpected popularity of its early retirement programme and ‘faster than expected implementation of the workforce reduction programme.
HP bumped up its third-quarter earnings forecast from 94 cents to 97 cents per share to $1 per share, but did not update its full-year fiscal 2012 guidance.
Meanwhile, the status of Autonomy, another major HP acquisition, remains unclear as it pertains to sales through the HP channel. HP closed its $10.3 billion acquisition of the U.K.-based information management software vendor last October, but the vast majority of HP partners globally are still not being permitted to sell Autonomy products.