This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

HP Goes Radio Silent Into 2013 on Autonomy Debacle

(Updated to reflect HP statement in 7th and 8thparagraphs)

NEW YORK ( TheStreet) -- Hewlett-Packard (HPQ - Get Report) set off fireworks in November when it said it was the victim of an accounting fraud related to its $11.1 billion acquisition of British software specialist Autonomy. Now, a late Thursday filing shows the U.S. Department of Justice is investigating HP's Autonomy unit.

However, the company remains notably silent on the investigation and is likely to have little new to say about the Autonomy deal in 2013.

As enforcement agencies pick up what HP said started as an internal investigation on whistleblower claims of fraud, all signs point to the company maintaining silence on those allegations now that legal authorities are investigating them.

HP's silence is consistent with its previous statements when first disclosing the fraud allegations; however, it also means the investigation may prove to be a distraction in 2013 as the PC giant tries to execute on a highly uncertain software and services transformation.

Meanwhile, the investigation may be a crucial test to HP chief executive Meg Whitman's reputation after she and the company's board supported the Autonomy deal in late 2011 and pinned most of this year's writedown on the recently uncovered alleged fraud.

HP shares, which are the worst performer in the Dow Jones Industrial Average in 2012, fell over 2.5% in Friday trading to $13.68, putting year-to-date losses at over 45%.

"HP has been very transparent about the issues relating to Autonomy and the reasons why we announced an $8.8 billion non-cash impairment charge on November 20th," the company said, in an emailed statement on behalf of spokesperson Michael Thacker.

The statement, which came after the publication of this article and a brief phone conversation with Thacker where he declined to comment beyond HP's Thursday filing added, "[We] continue to believe that the authorities and the courts are the appropriate venues in which to address the wrongdoing discovered at Autonomy."

In November, HP recorded a $8.8 billion fourth quarter writedown of Autonomy, erasing most of the software analytics unit's value to shareholders, and casting in doubt the company's efforts to remake itself into the mold IBM (IBM).

HP attributed the majority of the writedown to an alleged accounting fraud perpetrated by Autonomy prior to its Aug. 2011 acquisition and said it has referred the charges to Britain's Serious Fraud Office, the DoJ and the Securities and Exchange Commission. HP also said that fraud allegations relate to Autonomy's recognition of revenue and that the company opened an investigation when an Autonomy executive came forward with the fraud.

"HP is extremely disappointed to find that some former members of Autonomy's management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy's acquisition by HP. These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management's ability to fairly value Autonomy at the time of the deal," HP said in November.

Since disclosing its Autonomy-related writedown, HP's Thursday filing shows the company now faces ten separate shareholder lawsuits, including one from the City of Birmingham Retirement & Relief System.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HPQ $11.45 -1.21%
ORCL $39.23 -0.15%
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs