HP loss widens as EDS incorporated into local entity

Despite greater revenue due to buy, HP NZ posts $9.8 million loss for 2010 year

Hewlett-Packard New Zealand has reported a $9,833,000 loss for the financial year to October 31 2010, compared to a loss of $7,378,000 for the previous year.

This is despite a significant increase in sales revenue for the 2010 year, to $815 million, up from $538 million in the 2009 year. The increase was driven by the incorporation of EDS NZ into HP NZ in 2009; the 2010 year results are the first to include EDS within HP’s results.

The notes to the result announcement also reveal the purchase price of EDS NZ, which was $NZ363,484,000. In the notes, there is also a declaration of related-party transactions, which notes that in November 2009, HPNZ borrowed $187,484,000 from its US parent; presumably this was used to fund the purchases of EDS locally.

Globally, HP paid $US13.9 billion for EDS.

In the 2010 local results, depreciation and amortisation, and administrative expenses, were significantly higher in the 2010 year, offsetting the increase in sales revenue.

The notes to the results reveal that HP NZ made related-party transactions with HP Australia and the HP Co-ordination Centre during the 2010 year.

The EDS buy has greatly increased the depreciation figure in the latest accounts here in New Zealand, with accumulated depreciation and impairment of $72,737,000 in the 2010 year, compared with $3,346,000 in 2009.

Gross deferred income tax assets have also doubled, from $17,745,000 in 2009 to $31,091,000 in 2010.

Local wages and salaries were $167,293,000 in the 2010 year compared with $61,883,000 in 2009. This increase is due to EDS staff now being counted as HP employees.

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