HP: New Acquisition Cheated Us, Cost Us $8.8B

Company says it has alerted regulators

By Kevin Spak,  Newser Staff

Posted Nov 20, 2012 10:36 AM CST

(Newser) – Hewlett-Packard is accusing Autonomy Corp, which it purchased last year for $10.3 billion, of falsifying its finances—leading HP to take an $8.8 billion charge to sync Autonomy's accounting value with its real value. In a statement, HP accused "former members of Autonomy's management team" of using "accounting improprieties, misrepresentations, and disclosure failures" to make the company look healthier than it was when HP was considering buying it. HP says it has referred the matter to US and UK regulators and will pursue litigation, Bloomberg reports.

The news sent HP's stock crashing, down 14% to $11.44, its lowest level since 2002. CEO Meg Whitman tried to defend her company in a conference call today, noting that the financials were audited by Deloitte, and that the CEO who agreed to buy Autonomy, Leo Apotheker, has already been sent packing. She also gave examples of the tricks Autonomy used, which made the company's core software business appear to be growing faster than was actually the case. But "it seems very late in the day that HP would find accounting irregularities," one analyst tells Bloomberg. "It looks as though they're trying to find a way to write off the deal."

In this Monday, Aug. 20, 2012, photo, a Hewlett Packard keyboard is displayed at a Best Buy store in Mountain View, Calif.
In this Monday, Aug. 20, 2012, photo, a Hewlett Packard keyboard is displayed at a Best Buy store in Mountain View, Calif.   (AP Photo/Paul Sakuma)
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