Troubled technology giant Hewlett-Packard booked an $8 billion write-down Wednesday, reflecting losses at the world's largest PC maker stemming from its $14-billion purchase of Electronic Data Systems in 2008.
That company now forms the backbone of HP's services business but is struggling to compete with IBM amid a global economic downturn.
Though the division is HP's second largest with $17.46 billion in annual revenue, sales faltered in the first half of the year, prompting chief executive Meg Whitman to refocus the services business on fewer, but higher margin contracts.
In a statement, HP said that the adjustment "stems from the recent trading values of HP's stock, coupled with market conditions and business trends within the Services segment." The company's stock is down 60 per cent over five years and has dropped 25 percent since the start of the year.
"We're excited about growing these higher-margin categories, but this is a business that continues to be challenged," Whitman said during the company's May earnings call. "It's a journey, and we have a lot of work ahead of us in this turnaround."
HP also announced that it would take a pre-tax charge of between $1.5 to $1.7 billion due to faster-than-expected implementation of the restructuring program announced in May that seeks to shed 27,000 workers.
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