Technology giant Hewlett-Packard Co. (HPQ) Wednesday raised its adjusted earnings guidance for the third quarter, while saying it expects to incur an hefty $8 billion goodwill impairment charge for the quarter. However, HP did not provide an updated outlook for the full-year 2012.
The company also made organizational changes for HP Enterprise Services or HP ES, that is focused on "driving profitable growth, service innovation and client satisfaction for the Services business."
Palo Alto, California-based HP raised its third-quarter guidance for adjusted earnings to be about $1.00 per share from the prior forecast in the range of $0.94 to $0.97 per share.
On average, 26 analysts polled by Thomson Reuters expect the company to report earnings of $1.18 per share for the third quarter. Analysts' estimates typically exclude special items.
Meanwhile, the company said it expects to incur a non-cash pre-tax charge of $8 billion in the third quarter related to the impairment of goodwill within its services segment. The hefty charge stems from the recent trading values of its stock, coupled with market conditions and business trends within the services segment.
However, HP confirmed that the charge will not result in any future cash expenditures or even affect the ongoing business or financial performance of its services segment.
HP's current guidance for adjusted earnings excludes amortization and impairment of purchased intangible assets, goodwill impairment charges, restructuring charges and acquisition-related charges.
Additionally, the company raised its anticipated pre-tax charge in the third quarter related to its restructuring program announced in late May 2012, to a range of about $1.5 billion to $1.7 billion from the prior projection of a charge of about $1 billion.
Including the two charges and related costs, the company now expects to post a reported loss for the third quarter in the range of $4.31 to $4.49 per share.
The change is primarily driven by a higher than anticipated acceptance rate under its early retirement program and faster than expected implementation of the workforce reduction program.
Meg Whitman, who was appointed as HP CEO in September 2011, has been making sweeping organizational changes for the past nearly one year in a bid to make HP a leaner and meaner company. This includes the company previously announced plan to lay off 27,000 employees.
The company is now making changes in HP ES. It has named Mike Nefkens, current senior vice president and general manager of HP ES for EMEA, to lead the segment on an acting basis. Nefkens succeeds John Visentin, who is leaving the company to pursue other interests.
Further, Jean-Jacques Charhon, senior vice president and chief financial officer of HP ES, is named as chief operating officer for HP ES. Nefkens and Charhon will report directly to Whitman.
In Wednesday's regular trading session, HPQ is currently trading at $19.47, up $0.51 or 2.69% on a volume of 21.54 million shares.
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