HP has been unable to pick itself back up after being knocked down from its rendition of CEO roulette. Meg Whitman, former eBay CEO, picked up the slack and tried to continue on but problems continue to plague the company. If wavering on the future of webOS, deciding to make another smartphone and weathering a 30,000 employee layoff wasn't enough, HP has recently discovered a huge blunder with their $11 billion acquisiton of British software company, Autonomy. In fact, things are so bad now that the company announced this week that it would be devaluing $9 billion of the acquired assets in order to balance the sheet, citing "accounting improprieties and disclosure failures" during the purchase of Autonomy.
CEO Meg Whitman broke the bad news during HP's fourth-quarter earnings call. She said that Autonomy's books were completely wrong and way off before HP even looked to buy the company. It would appear that Autonomy's accounting team tried to hide their issues in order to sell their assets and jump ship. The earnings report (source link) explains the problem,
HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of approximately $8.8 billion in the fourth quarter of its 2012 fiscal year. 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. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge.
So what's next for the company? Even through all of this, Whitman emphasized that HP is still "100 percent committed to Autonomy and its industry-leading technology." I guess while the accounting team were a bunch of morons and essentially thieves, that the software is still a viable product. HP believes this too it would appear, as Whitman said the turnaround strategy on this asset will now be a "multi-year journey (that) will not be linear." I wonder what that journey will entail but I can assure you it will be an interesting story to follow as it develops. If we discover any specifics behind the falsifications of Autonomy's records, I'll be sure to share it with everyone. Until then, any guesses on what HP's next smartphone will be? Give us your best guesses in the comments below.