Hewlett-Packard Co. Blames Losses on Autonomy

Hewlett-Packard Co. Blames Losses on AutonomyThe Wall Street Journal is reporting that for the second quarter in a row, California-based Hewlett-Packard (H-P) has reported a multibillion-dollar write-down, this time totaling $8.8 billion related to its acquisition of software company Autonomy just over a year ago. H-P posted a nearly $7 billion loss this quarter, and blamed its loss largely on accounting irregularities and misrepresentations with regard to its $10 billion-plus purchase of Autonomy in 2011. H-P allegedly has reported what it believes to be fraudulent activity to both the U.S. Securities and Exchange Commission and the U.K. Serious Fraud Office, and maintains that it is pursuing private litigation over the alleged fraud, as well.

Former Autonomy management officials have denied all allegations of wrongdoing by H-P, and have attributed H-P’s problems to its mismanagement of Autonomy since the acquisition. H-P states that it relied on a Deloitte UK audit of Autonomy and a KPMG review during the due diligence process to ensure that Autonomy was financially sound. However, there was concern in the technology industry at the time of the acquisition that H-P was vastly overpaying for the company, and that there were accounting irregularities that may have contributed to Autonomy’s rapid growth.

H-P’s situation is illustrative of the pitfalls that can arise from acquiring another company, even when it appears to be a smart business move and a financially sound company. Not only has this situation resulted in an SEC investigation, but a civil lawsuit for breach of contract, fraud, and misrepresentation may very well follow. As a result, H-P would do well to follow its legal advisors as it plans its strategy for not only remedying the perceived wrongs committed by former Autonomy management, but also for pulling its company out of its current downslide.

If your business is involved in the acquisition of another business or company, or if you are dealing with the aftermath of such an acquisition, you are likely to need the assistance of qualified counsel every step of the way. Contact our office today for advice from your Naperville business attorney, and see how we can help.