On Wednesday, HP had more bad news for the PC market, when it reported that sales for its Personal Systems Group for the quarter ending July 31 fell year over year by 10 percent to $8.6 billion. The consumer segment dropped 12 percent while the commercial segment declined 9 percent. Sales for the related Imaging and Printing Group sales were down 3 percent to $6 billion.
Otherwise, HP ended up taking a $8.9 billion loss for the quarter. A big chunk of that -- $8 billion-- came in the form of a write-down on impairment of goodwill in its services division. Goodwill typically refers to non-tangible assets such as brand strength and business profile that go into calculating a company's total value. The writedown came in the wake of HP's $13.9 billion purchase of services company EDS. But goodwill aside, total sales for HP also fell, by 5 percent to $29.7 billion.
HP shares were hit by the bad news and on Friday continued to slump, dropping $0.07 to $17.56 in late afternoon trading. However, Dell edged up by $0.03 to $11.27 as markets looked up for the day. Computer stocks on the Nasdaq were up in aggregate by 0.41 percent as the broader S&P 500 index rose by 0.72 percent to hit 1,411.63 and the Dow Jones Industrial Average moved up by .58 percent to reach 13,163.75.
The uptick was ascribed by market analysts to a letter that U.S. Federal Reserve chief Ben Bernanke wrote to California Republican Darrell Issa, the chairman of the House Oversight and Government Reform Committee, in which he said, "there is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery."
The letter, written in response to questions and made public, also said that prior Fed actions to boost the economy, which included purchasing trillions of dollars in securities, "helped to promote a stronger recovery than otherwise would have occurred, and to forestall the possibility of a slide into deflation."
Until there is some stability in the economy, however, IT purchases, especially in the consumer arena, are bound to stay under pressure.