- November 20, 2012
- Posted by: Ted Bullen
- Category: Financial Management, High-tech, Information Technology, Mergers and Acquisitions, News
HP announced, today, that it would be taking an $8.8 billion charge resulting from accounting anomalies and improprieties discovered at Autonomy, a British Software maker that it bought last year. The announcement has caused HP shares to drop more than 13 percent.
The autonomy acquisition was done under former CEO, Leo Apotheker’s watch. The acquisition was panned as a major blunder, though Autonomy’s financials appeared to be satisfactory. HP’s board, of which current CEO Meg Whitman, was a member, retained Deloitte to audit Autonomy’s financials. In addition, HP hired KPMG to audit Deloitte’s work. Neither caught the accounting anomalies. This spring, after a senior Autonomy executive blew the whistle, HP hired a third accounting firm, PricewaterhouseCoopers, to investigate. With the help of the tip from the whistle-blower, they found irregularities that artificially bolstered Autonomy’s gross margin.
Of course, former members of Autonomy’s senior management team reject the allegation. Notwithstanding, HP has reported its findings to the Security and Exchange Commission in the United States and the Serious Fraud Office in the UK.
Ultimately, it seems, that a little more oversight should have been implemented upon making the acquisition. Too much autonomy at Autonomy has proved very costly to HP.