What was more troubling though was the additional write down of over $8.8 billion stemming from its acquisition of British software company Autonomy, which HP bought for $11.1 billion in 2011. HP has been conducting an internal investigation into the accounting behind its purchase of Autonomy and CEO Meg Whitman stated, “There appears to have been a willful sustained effort” to exaggerate the company’s profitability and that it “was designed to be hidden.”
Former CEO of Autonomy, Michael Lynch, disagrees as you might imagine, stating that his former company was destroyed in a year by mismanagement and infighting at HP. Nonetheless, HP has sent its findings to the SEC and the UK Serious Fraud Office and requested that investigations be started. The SEC appears to taking the matter seriously and the FBI may be getting involved as well.
Meanwhile, HP must contend with getting its house in order and getting back in the game. Unfortunately, the company seems to be moving awfully slow. Whitman has already confirmed the company will not be offering a smartphone in 2013, and the word on tablets is not very solid, and while we agree that the company should “get it right” we also think the company is missing out on the bigger picture, as clearly made evident by remarks made by the company’s PC chief, Todd Bradley. The smartphone and tablet segments are huge money makers with respectable margins. Taking years to get back in the game is not a guarantee of success, or in HP's case, a guarantee of anything.
HP is certainly not in the position that RIM is in, so no one is writing a eulogy. However, if HP plans to ever compete in the tablet or smartphone space again, it must move the way this “post-PC” era of tablets and smartphones moves, which is lightning fast. Before HP brings anything to market again, we will have been blessed with dozens of offerings from even the underdogs of contenders, like RIM and Nokia, not to mention LG, HTC, Samsung and the "events" put forth by Apple.
HP has many of the tools it needs in its toolbox. Let us hope there are some good things in the works.
sources: HP and Wall Street Journal