Like the nose of the Titanic slowly sinking into the ocean, HP’s descent has become epic. The company reported an $8.9 billion loss for the third fiscal quarter that ended at the close of July, weighed down by $8 billion in losses from the colossal weight of its troubled 2008 acquisition of Electronic Data Systems for $13 billion. For comparison, a year ago, the company had reported $1.9 billion in profit.
And its descent is far from over. The company warned investors things in 2013 could get worse before they get better.
“HP is still in the early stages of a multi-year turnaround, and we’re making decent progress despite the headwinds,” HP CEO’s Meg Whitman said in a statement. “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.”
The loss comes despite a slew of restructuring and downsizing efforts, including plans announced in May to lay off 27,000 employees, that will save the company $3 to 3.5 billion annually by 2014. The first wave of unemployment benefits from that 8 percent workforce layoff served to offset those savings, however, according to the AP.
In addition to losses from its EDS purchase, the company also suffers from waning PC sales in the wake of the mobile and tablet revolution. Once the world’s largest maker of computers, the company has not managed to produce a competitive tablet or smartphone to make up for its decline in computer sales. HP is not alone in its PC decline, with Dell also reporting dismal results in its quarterly report.
The company’s GAAP revenues were $29.7 billion, down 5 percent from $31.2 billion a year ago.
Though its PC sales declined 10 percent, the company did manage to increase software sales 18 percent, though non-organically. Much of the growth was a result of HP’s $10 billion acquisition of Autonomy, the last of a series of big spend buying sprees conducted by former President Leo Apotheker. He was replaced by Whitman in September after failing to turn around the company’s nosedive.
Whitman has a formidable job to pull off. If HP doesn’t find a way to quickly reinvent itself, it may end up becoming the next tech dodo bird for the ages.