The Palo Alto, California based hardware giant Hewlett-Packard (HP) just announced that it is taking an $8.8 billion accounting write-off for the acquisition of British software giant Autonomy they bought in the summer of 2011 for $10.3 billion. Due to the size of the acquisition two lawyers and several financial institutions assisted HP to make the deal. At the time of the acquisition, former CEO Léo Apotheker, who resigned month after the takeover, was in charge of HP. The HP alleged that the top management of Autonomy misled HP of its gross profit margin, falsely misled or miscategorized more than $200 million in revenue and other serious misrepresentations. HP also ousted the founder of the software company, Autonomy. The Autonomy’s former top management denies all allegations and states that its business slowed due to slow responses from HP.
The HP bought Autonomy to diversify itself from its reliance on PC and printer business and to expand on enterprise business solutions business. It is a huge blow to the company at a time struggling to turnaround the business. The write-off resulted in a loss of $6.9 billion for the quarter compared to $200 million profit for the same period last year.