Newsletters
Technology, Discovery & Innovation NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
This ad will display for the next 20 seconds. Click for more information, or
Home Computing Digital Life Discovery Space More Topics...
Computing
Average Rating:
Rate this article:  
HP Writes Down $8.8 Bil, Says Autonomy Cooked the Books
HP Writes Down $8.8 Bil, Says Autonomy Cooked the Books

By Jennifer LeClaire
November 20, 2012 2:10PM

Bookmark and Share
Details of massive corporate melodrama and a virtually unbelievable financial loss are unfolding for HP surrounding its acquisition of Autonomy. An intense internal investigation by HP, including review by PricewaterhouseCoopers of Autonomy's financial results, has led HP to believe that Autonomy was substantially overvalued.
 



It has all the earmarks of the next corporate scandal: Autonomy cooked the books, according to Hewlett-Packard, which has taken an $8.8 billion write-down on its 2011 acquisition of the U.K. company for more than $11 billion. The write-down appears in HP's latest quarterly earnings statement.

More than $5 billion of the impairment charge is linked to what HP called "serious accounting improprieties, misrepresentation and disclosure failures discovered by an internal investigation by HP and forensic review into Autonomy's accounting practices prior to its acquisition by HP. The other $3.8 billion is linked to the recent trading value of HP stock and headwinds against anticipated synergies and marketplace performance.

"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," the company said in a statement. "These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management's ability to fairly value Autonomy at the time of the deal. We remain 100 percent committed to Autonomy and its industry-leading technology."

Autonomy Overvalued

HP launched its internal investigation into these issues after a senior member of Autonomy's leadership team came forward, following the departure of Autonomy founder Mike Lynch, alleging that there had been a series of questionable accounting and business practices at Autonomy prior to the HP acquisition. This individual provided numerous details about which HP previously had no knowledge or visibility.

HP initiated an intense internal investigation, including a forensic review by PricewaterhouseCoopers of Autonomy's historical financial results. As a result of that investigation, HP now believes that Autonomy was substantially overvalued at the time of its acquisition due to the misstatement of its financial performance, including its revenue, core growth rate and gross margins, and the misrepresentation of its business mix.

"This appears to have been a willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers," HP said. "These misrepresentations and lack of disclosure severely impacted HP management's ability to fairly value Autonomy at the time of the deal."

What Does HP Do Now?

HP has referred the matter to the U.S. Securities and Exchange Commission's Enforcement Division and the U.K.'s Serious Fraud Office for civil and criminal investigation. In addition, HP is preparing to seek redress against various parties in the appropriate civil courts to recoup what it can for its shareholders. The company said it intends to aggressively pursue the matter in months to come. (continued...)

1  |  2  |  Next Page >

 

Tell Us What You Think
Comment:

Name:

Tom:

Posted: 2012-11-21 @ 3:45pm PT
@PK: You're exactly right. HP is a great company but it's tough to believe they could have made a mistake like this.

pk:

Posted: 2012-11-21 @ 2:39pm PT
If you are prepared to pay $11B for a company, shouldn't you be smart enough to look at their books and be able to discover these improprieties before you sign a check for such a huge amount?



Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.


 Computing
1.   Canada Says China Hacked Gov't
2.   MacBook Pros Get Update, Price Cut
3.   Cloud Wars: AWS vs. Microsoft, IBM
4.   Salesforce App Personalizes the Sale
5.   Watson's First Consumer-Facing Gig


advertisement
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Canadian Government Charges China With Cyberattack
The government of Canada is not happy with China. Canadian officials have accused "a highly sophisticated Chinese state-sponsored actor" of launching a cyberattack on its National Research Council.
 
Researchers Working To Fix Tor Security Exploit
Developers for the Tor privacy browser are scrambling to fix a bug revealed Monday that researchers say could allow hackers, or government surveillance agencies, to track users online.
 
Wall Street Journal Hacked Again
Hacked again. That’s the story at the Wall Street Journal this week as the newspaper reports that the computer systems housing some of its news graphics were breached. Customers not affected -- yet.
 

Enterprise Hardware Spotlight
Apple Updates MacBook Pros, Cuts Prices Up to $100
The popular MacBook Pro laptop line just got an update and a price cut of as much as $100. The MacBook Pro with Retina display now includes faster processors and double the memory.
 
Watson Gets His First Customer Service Gig
Since appearing on Jeopardy, IBM's Watson supercomputer has been making a living using his super-intelligent knowledge base for business verticals. Now, Watson's been hired for his first customer service job.
 
Tablet Giants Apple and Samsung Feel the Heat
When a company saturates its home market with a once-hot product, expect it to pump up efforts elsewhere. Apple, for its part, is now pushing iPads to big corporations and the enterprise market.
 

Mobile Technology Spotlight
Android 'Fake ID' Puts Millions of Users at Risk
Having this fake ID is nothing to brag about, even if you are a minor. The “Fake ID” Android flaw drops malware into smartphone apps. It can steal credit card data and even take over your device.
 
FTC Wants Fix for 'Perfect Scam' of Mobile Cramming
The U.S. Federal Trade Commission has issued new guidelines to curb “mobile cramming,” a troublesome practice that adds unauthorized third-party charges to mobile phone bills.
 
Facebook: You Will Use Messenger, and You Will Like It
Starting this week, Facebook users with Android and iOS phones will be forced to use the separate Messenger app to send Facebook messages. Pending messages will still be visible in the main app.
 

Navigation
Sci-Tech Today
Home/Top News | Computing | Digital Life | Discovery | Space | Innovation | Health | Science News
Environment
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.