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Restructuring HP suffers pains in bottom line

by on22 May 2015


Still better than expected

The maker of expensive printer ink, predicted that it would cost a fair bit to cut itself up even as it reported a better-than-expected quarterly profit.

HP kept its profit forecast unchanged for the full year, allaying fears of a strong dollar and weak enterprise demand for its services.

The 75-year-old company said it expects $400 million-$450 million of costs from the planned separation of its computer and printer businesses from its faster-growing corporate hardware and service operations.

An HP spokesman said it sees potentially $2 billion in restructuring costs in its Enterprise Services group over three years.

The company added it may reduce costs at the two companies by about $1 billion during the same period.

The forecast soothed investor concerns about costs for the breakup in the first year.

In February, HP forecast full-year earnings well below analysts' estimates, citing a strong dollar.

HP's net income fell to $1.01 billion, from $1.27 billion,  a year earlier.

Sales across most of HP's product lines fell, dragging its total revenue down 6.8 percent to $25.45 billion. Its enterprise services unit, which accounts for about a fifth of total revenue, suffered the most with a 16 percent drop.

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