In a shocking declaration computer maker Hewlett-Packard Company(NYSE:HPQ) has said that there were substantial instances of financial fraud related to its acquisition of software firm Autonomy in 2011.
The company said that the transaction for which it paid more than $10 billion would lead to write-downs worth $8.8 billion in non-cash charges. In effect the company is writing down close to 90 percent of the value of the transaction.
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The announcement overshadowed its results for the October quarter, which was ahead of Street expectations.
In a statement HP said, “HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP. These efforts appear to have been a wilful effort to mislead investors and potential buyers, and severely impacted HP management’s ability to fairly value Autonomy at the time of the deal. We remain 100 percent committed to Autonomy and its industry-leading technology.”
In the quarter to October HP posted revenue of $30 billion, down 7 percent from a year ago, or 4 percent adjusted for currency, and a bit below the Street consensus at $30.4 billion.
Non-GAAP profits were $1.16 a share, two cents better than the Street at $1.14.
For FYQ1 ending in January, the company sees non-GAAP profits of 68-71 cents a share, well below the Street at 85 cents.
Shares of HPQ have slumped 13% in early session.
Green Mountain Coffee Roasters Inc.(NASDAQ:GMCR) has appointed Coca Cola executive Brian Kelley as its Chief Executive, replacing Lawrence Blanford who has been at the helm since 2007.
Blanford had told the board in February that he planned to retire.
Shares of the company are up 7%.