HP takes $8.8 billion charge saying Autonomy fabricated finances

‘Self-Inflicted’

“They have a lot of deep-rooted problems,” said Eric Maronak, chief investment officer at Victory Capital Management Inc. in New York, which owns Hewlett-Packard shares. “A lot of it is self-inflicted.”

The net loss in the fiscal fourth quarter was $6.85 billion, or $3.49 a share, compared with net income of $239 million, or 12 cents, a year earlier. Results included the charge related to Autonomy.

Profit excluding some items was $1.16 a share, topping analysts’ average $1.14 estimate. Fourth-quarter sales fell to $30 billion. Analysts had projected revenue of $30.4 billion.

Hewlett-Packard, which gets more than a quarter of sales from PCs, is suffering as consumers and business users increasingly favor smartphones and tablets.

“The environment remains challenging for HP and other technology companies in the space,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc. “HP is unlikely to post revenue growth for a couple of years due to market dynamics in the PC and printing businesses.”

‘Shakier’ Future

The total PC market will contract by 1.2 percent to 348.7 million units this year, according to IHS iSuppli. That’s the first annual decline since 2001, the market researcher said.

Whitman said at the company’s annual investor meeting last month that a turnaround won’t happen anytime soon. At the time, she forecast earnings for the current fiscal year of $3.40 to $3.60 a share, lower than analysts had expected.

She is cutting 29,000 jobs by the end of fiscal 2014 to save as much as $3.5 billion a year. Whitman is also streamlining Hewlett-Packard’s unwieldy line of printers, overhauling technology services to improve profit, and re- entering the tablet computer market in January with the company’s ElitePad. The company is also focusing on products that help run corporate data centers, which yield higher profits than PCs.

“Everyone expected discouraging news and HP delivered even worse news,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. “Their big acquisition to grow their cloud computing and big data business -- their future -- is a bust. Their existing business is deteriorating and their future business looks shakier than ever.”

Bloomberg News

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