Léo Apotheker’s brief, unhappy tenure at Hewlett-Packard is the gift that keeps taking.
The highlights of his 10-month reign, which ended in September, 2011, included a loss of $30 billion in market capitalization, the shuttering of webOS operations, and turmoil caused by public musing about a possible sale of spin-out of the Personal Systems Group. His big move to redirect HP: The $12.5 billion purchase of business analytics software company Autonomy.
Oops.
HP announced today, as part of its dismal fourth fiscal quarter financial report that it was writing off $8.8 billion of Autonomy’s grossly inflated value. From the HP release:
HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of approximately $8.8 billion in the fourth quarter of its 2012 fiscal year. The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP’s acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge.
Looks like one of the many things Apotheker wasn’t very good at was due diligence. In an uncommonly blunt statement HP accused Autonomy of mischaracterizing “negative margin” sales (i.e., stuff sold at a loss) that made up 10% to 15% of Autonomy’s revenue and inappropriately using licensing transactions with resellers “to inappropriately accelerate revenue recognition, or worse, create revenue where no end-user customer existed at the time of sale. ” With language like “disclosure failures and outright misrepresentations,” I suspect former autonomy executives and investment bankers will be hearing from HP’s lawyers before long. Autonomy founder Mike Lynch joined HP after the acquisition, but left the company in May.
Revolving door CEO Léo Apotheker’s parting gift that just keeps giving.
What a disaster. HP is a tragedy unfolding right before our eyes.
Although the Autonomy malfeasance is the more immediate disaster, in the long run, I think the failure of webOS was far bigger. With webOS, HP had a chance to actually stand on their own and take on iOS, Android and Windows 8 with a well crafted mobile OS. Apotheker torpedoed webOS and, with it, HP’s last chance of breaking free of Windows. Now HP is, once again, nothing more than one of many hardware manufacturers for a Microsoft that clearly intends to do its own tablet and phone manufacturing in the future.
As I said, what a disaster.
Well thats not really true, HP is an ink company thats wants to make, no idea why, make computers. OK it does make good calculators but sooner or later it’s going to have it’s Kodak moment due to it desire to get into a low groth market that it’s not good at.
WebOs was a distraction, HP’s entire PC bussiness is a plagued donkey that is turning the company into a zombie, as tablets reduce the need for high priced ink, HP dies.
If you look at HP financials, the whole Imaging & Printing operation only accounts for about a quarter of the company’s profits. And printing was in decline before tablets came along, though they will doubtless accelerate the process. Software and services generates the highest margins of any HP operations, so the strategic direction makes sense. The execution, however, has been a catastrophe.
Steve, as you said awhile ago, somewhere in tech heaven, Bill Hewlett and Dave Packard are crying.
non-cash charge for the impairment of goodwill and intangible assets
That’s a very diplomatic way of saying “We are pretty F—ing stupid.”
I do not even understand how I ended up here, but I assumed this publish used to be great
As I website owner I believe the content material here is really good appreciate it for your efforts.