HP posts $8.9bn loss for FY12 third quarter
Revenues down across key business units as HP continues to reposition
HP has posted a loss of $8.9bn for the quarter ended 31st July.
The company reported a 5% year-on-year drop in revenue, from $31.2bn in Q3 FY2011 to $29.7bn in Q3 FY2012.
HP saw revenue down across all core businesses apart from software and financial services, and also had after-tax costs of $10.8bn, due to number of charges related to acquisition related charges, restructuring, the write down against the EDS deal and other charges and impairments.
HP president and CEO Meg Whitman, who was appointed in September 2011, and announced a major restructure in May this year, said that the company is still turning itself around.
"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," she said.
HP's Personal Systems Group (PSG) saw revenue down 10% year-on-year, with a decline in consumer sales revenue of 12%, desktop unit sales down 6% and notebooks unit sales down 12%.
The Imaging and Printing Group (IPG) had revenue down 3%, with consumer hardware revenue down 13%, while commercial revenue was up 4%. Combined the PSG and IPG divisions represent 49% of HP's total revenue for the quarter.
Overall Services revenue was also down 3%, with Technology Services revenue down 1% year-on-year, Application and Business Services revenue flat, and IT Outsourcing revenue down 6%.
Software revenue was the only area of strong growth, up 18%, with a 2% increase in license growth, 16% growth in support and 65% growth in services. HP Financial Services revenue was flat for the quarter.
Jack Narcotta, Analyst with TBR said that HP's efforts to present a unified brand and approach across all units, to offer an increased value proposition to wider markets, is being undermined by "a level of friction and disorganization that exists at many levels within HP".
"As evidenced by its declining revenues and flagging sales of hallmark products, HP's transformation from product vendor to solutions provider remains tumultuous," Narcotta said. "CEO Meg Whitman's plan to combine the value propositions of the company's isolated business units while simultaneously expanding its addressable customer base has been a catch-22. On one hand HP is aiming to utilize the aggregate experience and capabilities of its business units to open new markets and increase its presence within its existing customer base.
"On the other, the company's missteps - creating anxiety within its PC customer base through a rumor of a PSG spin-off and underwhelming results from its $10 billion purchase of Autonomy - have done little to support successfully communicating Whitman's vision of a unified HP to the IT marketplace. These missteps, combined with lagging sales and reinvigorating demand for its PCs and printers, are expected to obstruct not only HP's future growth, but upend its efforts to stabilize its present finances and expenses," he commented.