Saturday, May 18, 2013

Hewlett Packard and Autonomy – The Soap Opera Goes On, Plus a Lawsuit

One of these days, the stories will come together about Hewlett Packard and Autonomy.  In the mean time -  They paid too much.  They took an $8 billion write down on the acquisition.  They accused the Autonomy  of poor bookkeeping.  Hewlett Packard’s financial advisors on the acquisition  stated  that they did not need to do a total deep dive before putting their blessing on the acquisition.  The prior CEO of Autonomy, Leo Apotheker, states that the books were correct at the time of the acquisition and that revenue was accrued for properly. 

Now Hewlett Packard and CEO Meg Whitman are denying that the company has tried to sell Autonomy and SAP is saying that they were approached.  In addition, for Hewlett Packard, April showers brought…  May lawsuits, as they are now facing a $1 billion shareholder lawsuit over the acquisition.  The California suite filed at California's San Francisco district court, which accuses those who oversaw the deal of conducting "cursory due diligence on a polluted and vastly overvalued asset".  $1 billion buys a whole lot of HP tablets.
The stock has been recovering somewhat in price from its 52 week low of just under $11.35 to a 52 week high of $24 in late March.  When Meg Whitman took over the reins of Hewlett  Packard as CEO, the stock was trading at around $23.  For their first fiscal quarter of this year, net revenue was down  $28 B, lower than in fiscal Q1  2012.  Earnings were positive at $1.2 B, versus a loss of just under $7 B the previous quarter.  The stock is essentially unchanged, though, from a year ago while the Dow and NASDAQ are up about 25%.  Hewlett Packard has outperformed beleaguered Dell (another interesting story) but not by much. 


Whitman may make it through the end of 2013.  If so, Oracle’s Hurd, formerly of Hewlett Packard, will have to find a different partner for “Dancing with the Stars”.  The earnings conference call for the latest quarter is scheduled for May 22 after the markets close.    

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