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hp purchase autonomy

Article Index

How I "Saw" the Carnage at Hewlett-Packard (NYSE: HPQ)

By , Defense + Tech Specialist, Money Morning • @Robinson_STI -

If you've been following my advice, you avoided the carnage at the fumbling tech giant, Hewlett-Packard (NYSE:HPQ)

In fact, I told my Radical Technology Profits readers on Sept. 18 not to buy into the hype that H-P was becoming a great turnaround story.

That was after I wrote in this Money Morning article from January that H-P was one of the five tech stocks to avoid. It's lost over half of its value since then.

And had you used my Real Demand Tracking System to check out this stock, you would have seen for yourself that H-P was a lousy investment.

No, I didn't have any insider source that warned me about the accounting scandal rocking this Silicon Valley giant.

It runs deeper than that -- the fundamentals and the technicals were just plain horrible for what is clearly a deeply troubled stock.

Hewlett-Packard's Autonomy Problem

In case you missed the news, H-P got crushed last week, falling more than 11% on word that the firm is writing down some $8.8 billion in the most recent quarter.

Honestly, that's an outrage.

I know, the party line is that H-P got hoodwinked when it bought the U.K. software firm Autonomy. Seems a whistle blower has now come forward to say Autonomy's accounting practices made the company a financial house of cards.

But as I see it, there was plenty of reason for HP to have been more cautious.



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The Latest Hewlett-Packard (NYSE: HPQ) Deal Disaster

By , Money Morning -

Computer maker Hewlett-Packard Co. (NYSE: HPQ) reported fourth-quarter earnings yesterday (Tuesday), surprising the market with an $8.8 billion charge against its acquisition of British software company Autonomy.

HP alleges that $5 billion of the charge is related to fraud and misrepresentation by Autonomy management prior to the acquisition, a charge that former Autonomy CEO Mike Lynch vehemently denies.

This is the second multi-billion dollar charge to earnings resulting from an acquisition in as many quarters. In the third quarter, Hewlett-Packard took a nearly $11 billion charge on its acquisition of Electronic Data Systems (EDS), which failed to perform up to expectations.

Hewlett-Packard acquired Autonomy in the summer of 2011 as part of former CEO Leo Apotheker's strategy to move HP away from its reliance on computer hardware and increase revenue from the sale of high value-added software. Apotheker was forced out of Hewlett-Packard only three weeks after Autonomy was acquired and HP's new CEO, Meg Whitman, has put less emphasis on the software side of the business as she tackles the much bigger problem of restructuring the company's product lineup and its global strategy.

During Tuesday's conference call, Whitman talked about Autonomy, saying, "The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations that occurred prior to HP's acquisition of Autonomy and the associated impact on the expected financial performance of the business over the long term."

"These improprieties were discovered through an internal investigation after a senior member of Autonomy's leadership team came forward following the departure of Mike Lynch on May 23. Based on this information, HP initiated an intense internal investigation into the allegations, including a third-party forensic review of Autonomy's historical financial results."

Whitman concluded, "HP has contacted the SEC's enforcement division and the U.K.'s Serious Fraud Office. We have requested that both agencies open criminal and civil investigations into this matter. In addition, HP intends to seek redress against various parties in the appropriate civil courts to recoup what we can for our shareholders."



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