HP Boosts Its Q3 Guidance and Its Expected Restructuring Charge

Hewlett-Packard just dropped a bit of a mixed bag of a press release. The headline is that it now expects its earnings in Q3 to be higher than what it previously gave. It had given a range of 94 cents to 97 cents per share as its expected quarterly profit. It now says it expects to earn $1 a share.

But it also boosted what it expects to lay out in restructuring charges. Remember that HP is going through the process of laying off 27,000 people over three years, about 9,000 of whom are expected to go this year. It now says it expects to incur between $1.5 billion and $1.7 billion in restructuring charges in fiscal 2012. The main reason is that HP employees are responding to the voluntary retirement program at a higher rate than expected.

There’s also going to be an $8 billion impairment charge to its services business, the IT services unit, essentially for the company formerly known as EDS, which HP acquired in 2008 for about $14 billion under former CEO Mark Hurd. CEO Meg Whitman has been complaining about troubles in this unit for awhile now, saying mostly that it’s going to have to focus on fewer, more profitable deals than on a large number of lower-margin ones. Expect a lot of attention on this business in the coming year, as Whitman’s turnaround program gets underway in earnest.

Overall, it looks like Whitman and her team, including longtime CFO Cathie Lesjak, are using this quarter — which was expected to be a tough one, given all the mishegas that has come from HP’s competitors — to take a lot of bitter financial medicine all at once. Shareholders seem to like it. HP shares are rallying by more than 3 percent, after about five minutes of trading in New York, to $19.53. This comes after a 5 percent rally during the pre-market session, when HP shares briefly traded for more than $20 a share.

There were also some executive moves, most of them in Enterprise Services, hence my reference to the mixed bag. Here they are: