When Hewlett-Packard Company (NYSE:HPQ) had unveiled its strategy of purchasing Autonomy Corp. in August of 2011, h\the chief executive, Leo Apotheker called the British company an extremely profitable and internationally esteemed software company that has a well-regarded management team with devoted and talented employees.
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Chief Executive of Autonomy, Mike Lynch, who joined HP later on, called it ‘a momentous day’ when the deal was inked. It is now valued at about $11 billion.
Wall Street was not impressed since HP’s stock plunged by 20% that very day. A reason behind the drop in the stocks was the confusing declaration that HP was considering leaving the PC business. However, the plunge was also because of the view that the contract with Autonomy was expensive and did not make much sense.
A year afterwards, Autonomy has struck HP shares once more. The stock shot down about 12% on Tuesday after the company had posted an impairment charge of about $9 billion.
In a shocking comment, HP has essentially declared that it was duped in the Autonomy transaction.
The company has said on Tuesday that that Hp now is of the opinion that Autonomy was substantially overvalued at the time of its purchase because of a misstatement of financial performance of Autonomy, including its core growth rate, gross margins, revenue and the misapprehension of its business mix.
CEO Meg Whitman, who has replaced Apotheker after his abrupt resignations at the HP, has mentioned over calls with analysts that HP has plans of redressing against the people, who are involved in the fraud.
She has also said that the majority of the board was there and had voted for the contract. Now, they feel terrible about it.
HP’s claims regarding the fraud were highlighted after a senior member of Autonomy came under the spotlight after Lynch’s departure and told Hp that there has been a number of dubious accounting and business practices at Autonomy after it was purchased by HP.