Hewlett-Packard on Wednesday announced a $8.9 billion loss for its third quarter ended July 31 due to writedowns and weak hardware sales and also said full-year results would be at the low end of its previous guidance.
Earlier this month, HP said it would take an $8 billion "impairment of goodwill" writedown against its services division. "Goodwill" refers to less tangible assets, such as brand strength, that are considered when figuring out a company's total value. HP's $13.9 billion acquisition of services provider EDS has been roundly criticized as too costly.
HP also said earlier this month that it would have a bigger-than-expected charge in the third quarter in connection with a workforce reduction plan announced earlier this year.
Revenue for the third quarter fell 5 percent year over year to $29.7 billion.
Without the writedowns and other one-time costs, third-quarter profits would have been $1.97 billion, down 9 percent year over year.
Excluding one-time costs, full-year earnings per share will be $4.05 to $4.07. In May, HP said it expected full-year earnings of $4.05 to $4.10 per share.
Personal Systems Group revenue in the quarter fell 10 percent to $8.6 billion, with a 12 percent drop in consumer spending and a 9 percent fall in commercial purchases. Within the segment, desktop units fell 6 percent and notebook units dropped 12 percent.
Imaging and Printing Group sales were down 3 percent to $6 billion. While commercial sales rose 4 percent, consumer purchases dropped 13 percent, according to HP.
Services revenue fell 3 percent to $8.75 billion.
Enterprise servers, networking, and storage sales dropped 4 percent to $5.1 billion, with the biggest hit taken by Business Critical Systems, where revenue fell 16 percent.
The BCS segment includes high-end servers made with Intel Itanium chips. HP recently won a legal decision in connection with a lawsuit it filed against Oracle, following Oracle's announcement that it would stop porting its software to Itanium. HP has attributed slumping BCS sales to uncertainty caused by the dispute.
Software sales rose 18 percent to $973 million, driven by last year's acquisition of Autonomy. However, new license growth, a key indicator of health in a software business and the mood of customers for starting new projects, rose only 2 percent. Software-related support revenue was up 16 percent and software services rose 65 percent.
HP rival Dell also released financial results this week, reporting Tuesday that second-quarter profit had fallen 18 percent due to lower sales of desktop PCs, laptops and other mobile products.
HP CEO Meg Whitman, who took over last year following the ouster of Leo Apotheker, has been tasked with reversing HP's fortunes as it attempts to reinvent itself as more of a software company and remain a viable player in hardware.