Wednesday, November 21, 2012

Hewlett-Packard Company (NYSE:HPQ) takes hit of $8.8 bln due to Autonomy accounting fraud

It has created ripples in the corporate sector.

Hewlett-Packard Company(NYSE:HPQ) on Tuesday said that it would have to take a charge of $8.8 billion related to its acquisition of software firm Autonomy, following a massive accounting scaldal in the latter.

On Tuesday the computer and server maker said that it had discovered "serious accounting improprieties" and "a willful effort by Autonomy to mislead shareholders," after a whistleblower came forward following the May ouster of former Autonomy Chief Executive Mike Lynch.

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Shares in HP plunged more than 12 percent after the announcement, falling to a 10-year low.

"Most of the board was here and voted for this deal, and we feel terribly about that," Chief Executive Whitman said on a call with analysts.

Tuesday's announcement came just three months after the company took a write-down of almost $11 billion on its EDS services division.

HP is feeling the brunt of the slowdown - not only of the broad economy but also a shift in consume preference to traditional computing devices to tablet PCs and other mobile devices.

The market capitalisation of the company, once hailed for its efficiency and technical excellence has dropped to $20 billion from $55 billion in about 12 years.

HP said it has referred the alleged accounting wrongdoing at Autonomy to the U.S. Securities and Exchange Commission's enforcement division and the UK's Serious Fraud Office for civil and criminal investigation. HP also said it would take legal action to recoup "what we can for our shareholders."

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