© 2024 Michigan State University Board of Trustees
Public Media from Michigan State University
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

HP Takes $8.8 Billion Hit From 'Misrepresentations' By Company It Bought

At Hewlett-Packard headquarters in Palo Alto, Calif.
Justin Sullivan
Getty Images
At Hewlett-Packard headquarters in Palo Alto, Calif.

Saying it was a victim of "serious accounting improprieties, disclosure failures and outright misrepresentations" by a British software company it acquired last year, tech titan Hewlett-Packard just announced it erased $8.8 billion from its books last quarter to properly account for the acquisition.

The accounting charge "essentially wiped out the company's profits" for the quarter, as The New York Times' DealBook blog writes. CNBC notes that Hewlett-Packard avoided calling what happened fraud.

The company's stock is down nearly 10 percent in "pre-market" trading this morning.

As DealBook adds, H.P. bought the firm, Autonomy, last summer "to bolster the technology pioneer's presence in the enterprise software market."

The Financial Times notes that:

"The decision to pay $10 billion for Autonomy was criticized earlier this year after HP reported 'very disappointing' revenues for the enterprise search company in its April quarter. This resulted in [CEO Mike] Lynch leaving HP. HP announced an $8 billion writedown in August in its services division, made up largely of its $14 billion EDS acquisition of 2008."

HP has "contacted the Securities and Exchange Commission's enforcement division and the U.K.'s Serious Fraud Office," the FT says.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

Mark Memmott is NPR's supervising senior editor for Standards & Practices. In that role, he's a resource for NPR's journalists – helping them raise the right questions as they do their work and uphold the organization's standards.
Journalism at this station is made possible by donors who value local reporting. Donate today to keep stories like this one coming. It is thanks to your generosity that we can keep this content free and accessible for everyone. Thanks!