Bill Kreher, an analyst at Edward Jones, said Hewlett-Packard Co. (HPQ:US) is accusing software maker Autonomy Corp. of falsified finances to deflect from a badly executed acquisition.
Hewlett-Packard, based in Palo Alto, California, last week accused Autonomy of financial irregularities and recorded a related $8.8 billion writedown. More than $5 billion of the impairment charge was the result of accounting practices, Hewlett-Packard said on Nov. 20. Autonomy has denied the allegations. Michael Thacker, a spokesman for Hewlett-Packard, said in an e-mailed statement today that Autonomy engaged in “a willful effort to mislead investors and potential buyers.”
Former Chief Executive Officer Leo Apotheker, 59, agreed to buy Autonomy for $10.3 billion last year to diversify away from hardware and add software that searches a broad range of data, including e-mails, music, videos and posts on social networks such as Facebook Inc. Apotheker left in 2011 after less than a year on the job following repeated strategy shifts and forecast cuts.
Autonomy was supposed to be “the crown jewel of the software turnaround and the software transition” at Hewlett- Packard, Kreher said in a radio interview with Tom Keene on “Bloomberg Surveillance” in New York today. “They really have to rethink their plans here. Certainly this is a setback for a company that is trying to restore its credibility as an enterprise leader.”
The writedown is another blow for Hewlett-Packard, which is already suffering from management turmoil and slowdowns in its personal-computer, printer and technology-services businesses. It comes three months after the company announced an $8 billion writedown related to an earlier acquisition.
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