HP takes $8bn goodwill charge

The manufacturer, which is in the middle of a large-scale restructuring programme, also admitted that it was facing a higher than expected take-up of its early retirement initiative and expects to record a pre-tax charge of between $1.5 billion to $1.7 billion, up on its initial estimate of $1 billion.

Analysts have attributed much of the multi–billion dollar write–down to the declining value of Electronic Data Systems (EDS), which former HP chief executive Mark Hurd paid $13.2 billion for in 2008.

Technology analyst Shaw Wu of Sterne Agee said in an interview that more write-downs could follow in light of HP’s acquisition strategy over recent years, which included the $11 billion takeover of UK software company Autonomy in 2011.

HP acquired more than 30 companies over five years in a bid to boost to its presence in corporate IT.

Chief executive Meg Whitman said in June that its acquisitions strategy had led to huge debts which in turn had left the company with little room to manoeuvre as it seeks to reverse a slump in sales and slash debt.

Whitman took over from former chief executive Leo Apotheker a month after the Autonomy takeover, which analysts fear could also face a significant write-down.

The company has unveiled plans to trim its global workforce by 8% between now and 2014 largely through early retirement offers and attrition.

HP Australia declined to comment.

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This article originally appeared at printweek.com

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