HP Takes $8.8 Billion Hit From 'Misrepresentations' By Company It Bought
Saying it was a victim of "serious accounting improprieties, disclosure failures and outright misrepresentations" by a British software company it acquired last year, tech titan Hewlett-Packard just announced it erased $8.8 billion from its books last quarter to properly account for the acquisition.
The accounting charge "essentially wiped out the company's profits" for the quarter, as The New York Times' DealBook blog writes. CNBC notes that Hewlett-Packard avoided calling what happened fraud.
The company's stock is down nearly 10 percent in "pre-market" trading this morning.
As DealBook adds, H.P. bought the firm, Autonomy, last summer "to bolster the technology pioneer's presence in the enterprise software market."
"The decision to pay $10 billion for Autonomy was criticized earlier this year after HP reported 'very disappointing' revenues for the enterprise search company in its April quarter. This resulted in [CEO Mike] Lynch leaving HP. HP announced an $8 billion writedown in August in its services division, made up largely of its $14 billion EDS acquisition of 2008."
HP has "contacted the Securities and Exchange Commission's enforcement division and the U.K.'s Serious Fraud Office," the FT says.