HP Acknowledges "Serious Accounting Improprieties" in Q4 Financial Statement - HotHardware
HP Acknowledges "Serious Accounting Improprieties" in Q4 Financial Statement

HP Acknowledges "Serious Accounting Improprieties" in Q4 Financial Statement

Hewlett-Packard today announced financial results for its fourth fiscal quarter and full fiscal year ended October 31, 2012, noting an $8.8 billion asset impairment charge related to the acquisition of software firm Autonomy. That's a pretty big write-off, and HP is essentially claiming fraud on the part of Autonomy.

"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," HP said in a statement.

HP acquired Autonomy a little over a year ago for $42.11 per share, or around $10.2 billion. It was one of the last decisions HP's previous CEO Leo Apotheker made before he was replaced with former eBay chief Meg Whitman. According to HP, Autonomy at the time misrepresented its value by $5 billion.

HP Sign

"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 added. "These misrepresentations and lack of disclosure severely impacted HP management's ability to fairly value Autonomy at the time of the deal."

HP reported revenue of $120.4 billion for its full fiscal year, down 5 percent from one year ago and 4 percent when adjusted for the effects of currency. Personal Systems revenue declined 14 percent year-over-year, Printing revenue fell 5 percent, Services dropped 6 percent, and Enterprise Servers, Storage, and Networking (ESSN) declined 9 percent.

Not ever sector saw a drop in revenue. HP's Software revenue grew 14 percent year-over-year, while HP Financial Services revenue nudged up a percentage point compared to last year.
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HP acquired Autonomy a little over a year ago for $42.11 per share, or around $10.2 billion. It was one of the last decisions HP's previous CEO Leo Apotheker made before he was replaced with former eBay chief Meg Whitman. According to HP, Autonomy at the time misrepresented its value by $5 billion.

Leo Apotheker really screwed HP over, IMO, and his short time there is still affecting the company. Take a look at this excerpt from Wikipedia concerning Leo's dirty deeds:


During Apotheker's tenure at HP the stock dropped about 40%. It dropped nearly 25% on 19 August 2011, after HP announced a number of seemingly abrupt strategic decision: to discontinue its webOS device business (mobile phones and tablet computers), to begin planning to divest its personal computer division, and to acquire British software firm Autonomy for a significant premium.[13] Over the months following Apotheker's departure, HP eventually spun-off the remaining webOS assets into a new subsidiary, Gram; backtracked on any plans to spin-off its personal computer division; and wrote-down almost $9 billion related to the Autonomy acquisition, which it indicated was due to a lack of due diligence during the acquisition process under Apotheker.[14]

On September 22, 2011, the HP Board of Directors replaced Apotheker as chief executive, effective immediately, with fellow board member and former eBay chief Meg Whitman.[15] Though Apotheker served barely ten months, he received over $13 million in compensation: a severance payment of $7.2 million, shares worth $3.56 million, and a performance bonus of $2.4 million,[16] although the company lost more than $30 billion in market capitalization during his tenure.

 

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