Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
In its latest quarterly financial report, HP posted a $7 billion loss, due in large part to a $8.8 billion write-down of the value of software firm Autonomy, which HP bought last year. HP says the write-down was triggered by its discovery of “serious accounting improprieties” and “outright misrepresentations” that occurred before the acquisition.
Bloomberg’s Aaron Ricadela and Amy Thomson reported, “Hewlett-Packard Co. plunged to the lowest price in a decade after it said the British software company purchased last year falsified its finances, resulting in an $8.8 billion charge to write down the value of the Autonomy Corp. business. ‘HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP,’ Palo Alto, California-based Hewlett-Packard said today in a statement.”
According to Ben Worthen with The Wall Street Journal, “H-P Chief Executive Meg Whitman said an internal investigation revealed ‘serious accounting improprieties’ and ‘outright misrepresentations’ with Autonomy, a U.K. software maker that H-P bought for more than $10 billion in 2011. In particular, H-P said Autonomy—before it was acquired—mischaracterized some sales of low-margin hardware as software and recognized some deals with partners as revenue even when a customer never bought the product. Ms. Whitman said H-P has alerted the U.S. Securities and Exchange Commission and the U.K. Serious Fraud Office and requested that they open an investigation. The company said it’s also seeking recourse through private litigation, though Ms. Whitman stressed any such outcome could take years. Of the $8.8 billion charge related to the write-down, more than $5 billion is related to the accounting issues.”
Reuters noted, “Mike Lynch, the former chief executive of Autonomy, on Tuesday ‘flatly rejected’ allegations made by the company’s new owner Hewlett Packard regarding ‘serious accounting improprieties.’ In a brief statement released to Reuters, a spokeswoman said the former management of Autonomy denied the allegations. ‘The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false,’ she said.”
InformationWeek’s Paul McDougall wrote, “For the quarter ended Oct. 31, HP said revenue was $30 billion, down 7% from the same period a year ago. The company posted a loss of $3.49 per share. For the full fiscal year 2012, HP recorded a loss of $12.7 billion, on revenue of $120.4 billion which was off 5% from the prior year.”
