HP Writes Down Nearly $1.7B in Losses on Palm Investment
Hewlett-Packard (NYS: HPQ) wrote down a total of $1.67 billion in its fiscal fourth quarter related to its decision to wind down its webOS device business, the company said, giving a financial postscript to its $1.2 billion acquisition of Palm in 2010.
HP said it booked a total charge to its operating income of $788 million related to the closure of the webOS device business, a move announced Aug. 18. On the company's earnings conference call, HP CFO Catherine Lesjak said the charge consisted of a net revenue reduction of $142 million related to a sales incentive program, $548 million in cost of sales due to supplier-related obligations and inventory reserves and $98 million in operating expenses and restructuring charges.
In addition to that charge, HP also was hit with an impairment expense of $885 million against a carrying value of goodwill and purchased intangible assets related to the acquisition of Palm.
HP did not indicate any decision about what it will do with the webOS platform, which was the central piece of HP's acquisition of Palm. HP discontinued selling its TouchPad tablet and webOS smartphones earlier this fall.
According to a recent Reuters report, which cited four unnamed sources familiar with the matter, HP hopes to sell webOS for "hundreds of millions of dollars." The report said that Amazon.com, IBM, Intel, Oracle and Research In Motion (NAS: RIMM) are among the companies interested in acquiring the platform.
A report Monday in VentureBeat, which also cited unnamed sources, said HP is tying any potential sale of webOS to the premise that HP will be given a license to use the platform in its printers. The report said Intel has started negotiations with HP and that chipmaker Qualcomm (NAS: QCOM) is also in the mix, though Qualcomm has previously denied interest. An HP spokeswoman did not immediately respond to a request for comment.
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