HP takes $US8.8 billion charge on Autonomy accounting improprieties
- 20 November, 2012 14:21
Hewlett-Packard is taking an $US8.8 billion charge as a result of what it called serious accounting improprieties that occurred at UK software company, Autonomy, before it acquired the firm in 2011.
Taking the charge into account, HP suffered a $US6.9 billion loss in the fourth quarter. HP CEO, Meg Whitman, said that Autonomy misled HP about the state of its business before the acquisition.
HP has notified authorities and will help criminal investigations, Whitman said.
HP bought Autonomy for its enterprise search engine technology, among other things.
- The majority of the impairment charge resulting from the Autonomy acquisition was "linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy," Whitman said on the conference call.
- "These improprieties were discovered through an internal investigation after a senior member of the Autonomy leadership team came forward following the departure of (former Autonomy CEO Mike Lynch) on May 23rd," Whitman said.
- "Based on this information HP initiated an intense internal investigation including a third-party forensic review of Autonomy's historical financial results. HP has contacted the SEC's enforcement division and the U.K. Serious Fraud Office. We have requested that both agencies open civil and criminal investigations into this matter," Whitman said, adding that "HP intends to seek redress against various parties in the appropriate civil courts."
For the fourth quarter, HP's net revenue dropped 7 per cent to $US30 billion as the company's PC market share declined and printer sales dropped. Analysts had expected the company to generate $US30.43 billion in sales, according to a Thomson Reuters poll.
- Several major HP business areas suffered a decline in the fourth quarter. Services revenue dropped 6 per cent year over year. Enterprise servers, storage and networking revenue declined 9 per cent year over year.
- One bright spot was software revenue, which increased 14 per cent year over year with a solid 27.2 per cent operating margin. Networking revenue was up, by 7 per cent.