Hewlett Packard released its fourth-quarter financial results ahead of schedule Tuesday morning, including a charge for £5.5 billion related to its acquisition of UK software firm Autonomy.
Hewlett Packard released its fourth-quarter financial results ahead of schedule Tuesday morning, including a charge for $8.8 billion (£5.5 billion) related to its acquisition of UK software firm Autonomy.
HP says the bulk of the charge, for impairment of goodwill and intangible assets, is "linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy."
Taking the charge into account, HP suffered a $6.9 billion (£4.3 billion) loss in the fourth quarter. HP CEO Meg Whitman said on a conference call Tuesday 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 percent to $30 billion as the company's PC market share declined and printer sales dropped. Analysts had expected the company to generate $30.43 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 percent year over year. Enterprise servers, storage and networking revenue declined 9 percent year over year.
- One bright spot was software revenue, which increased 14 percent year over year with a solid 27.2 percent operating margin. Networking revenue was up, by 7 percent.
- HP shares dropped 11 percent to $11.84 in premarket trading Tuesday morning.
Additional reporting by Elizabeth Heichler