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All is not well at Meg Whitman’s HP, we learned during the company’s fourth-quarter earnings call this morning. HP just recorded a $9 billion devaluation of its assets stemming from serious accounting tomfoolery at a company that HP bought for $10 billion last year. Ouch.
Last August, HP bought the British software company Autonomy for $10.3 billion making it one of HP’s biggest assets. In today’s call, HP claimed that Autonomy’s books had been cooked before HP ever got there, and the company will take an $8.8 billion hit to its balance sheet to compensate. Some nitty-gritty from the earnings statement:
The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP’s acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term.
So even though Autonomy’s accounting department was apparently staffed by liars, the software engineering is still sound. If I were an HP investor, I would be pissed. What, was HP too busy testing printer apps to do any due diligence? [HP via Engadget]
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Why does this article show a palm phone? If you didn’t click on article it would give the impression that Palm were the cause of the cost, rather than the company bought by the next CEO who decided that they weren’t going to be doing much with Palm after all and instead wasted the companies money on autonomy, which has done even less for them.
Anyone know where to get the wallpaper from that Veer?
I find the HP story incredible. So Autonomy overvalued their business by approx. 90%. And HP, one of the biggest and most experienced organisations in the IT industry, failed to notice that in a $10.5 billion acquisition. $8.5 billion in “accounting irregularities” sounds like a load of bull and more like Whitman’s attempt to ridicule Apotheker – as if she had to try.
If it is true, it’s not former Autonomy employees that should be investigated but those who managed the acquisition (looking at you Leo). In fact, I would hire them Autonomy employees!