Struggling U.S. software group, Hewlett Packard, announced yet another blow to its long suffering investors today with a $8.8 billion write down in the value of Autonomy, the FTSE 100 company it acquired for $10 billion in August 2011 after alleged serious accounting irregularities at the software company. This latest write down follows an $8 billion charge for its 2008 EDS acquisition and is yet another mis-step for CEO Meg Whitman. Autonomy was snapped up to expand its presence in the high margin corporate software IT market with the deal being criticized for its high valuation. After today’s news, the past critics look to be right about the flawed logic of the deal.
In a statement, H-P said the impairment charge was largely due to “serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corp. that occurred prior to H-P’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.”
The miss reporting was discovered after a senior member of Autonomy’s management team came forward after ex-CEO Mike Lynch was forced to leave the business in May 2012. This was followed by a review by third party accountants.
Hewlett Packard has reported the issues to the SEC and Serious Fraud Office.
The company reported a fourth-fiscal-quarter loss of $6.85 billion, or $3.49 a share, compared with a profit of $239 million, or 12 cents a share, in the year-earlier period. Revenue was $29.96 billion, down from $32.12 billion. Adjusted profit was $1.16 a share. Expectations were for earnings of $1.14 a share, on revenue of $30.44 billion.