HP raises outlook, replaces head of Enterprise Services and plans massive charge for unit

NEW YORK, N.Y. – Hewlett-Packard Co. on Wednesday said that it will take a massive charge against its earnings for the latest quarter, but that results excluding charges were better than expected.

The computer company also said the head of Enterprise Services, its second-largest division, is leaving “to pursue other interests.” John Visentin will be replaced on an interim basis by Mike Nefkens, currently the head of Enterprise Services in Europe, the Middle East and Africa.

HP shares rose 75 cents, or 3.9 per cent, to $19.71 in morning trading. The shares are still close to their lowest levels in eight years.

The Palo Alto, Calif., company said it will take an $8 billion charge for the reduced value of Enterprise Services in the quarter that ended in July. The division’s revenue has been flat for the last two years, and its operating profit has declined.

It also said the early retirement program it announced in May is meeting with unexpectedly high acceptance, meaning it will take a charge of $1.5 billion to $1.7 billion in the third quarter, rather than the $1 billion it expected.

Excluding charges, HP said it expects to report fiscal third-quarter earnings of $1 per share, up from a previous range of 94 cents to 97 cents. Analysts expected earnings of 97 cents per share, according to a poll by FactSet.

The restructuring announced in May is expected to slash 27,000 jobs, or 8 per cent of HP’s work force, by 2014. It’s the largest downsizing in the company’s history.

HP is set to report third-quarter results on Aug. 22.