HP planning $8 billion charge within Services segment for Q3

HP has announced they will be shuffling executives in charge of their enterprise services unit as well as taking an $8 billion charge associated with the services segment. Furthermore, they are expecting to take a pre-tax charge of between $1.5 billion to $1.7 billion in the third quarter to handle employees that have decided to take early retirement packages.

John Visentin has elected to leave HP as the head of their enterprise services unit in order to pursue other interests, prompting the company to promote Mike Nefkens to fulfill his spot on an acting basis. Meanwhile, Jean-Jacques Charhon was repositioned to chief operating officer for the division and will report directly to Nefkens. HP said in a statement that the moves were done to help service innovation, profits and customer satisfaction

On the financial side, HP is writing down $8 billion in goodwill related to the enterprise business. The company noted that stock price and market conditions led to the decision to do so. Third quarter earnings, however, will be $1 per share, up from the 94 cents to 97 cents per share estimate.

Abhey Lamba from Mizuho Equity Research believes that restructuring in services will be a multi-year task that will continue to impact the division’s results in the short term. Brian Marshall from ISI Group noted in a report today that the executive changes reflect HP’s efforts to streamline the organization and rejuvenate the services business.