Hewlett Packard Implodes After Disclosing Accounting Fraud At Autonomy plc Business

Tyler Durden's picture


That Hewlett Packard would miss results (it did, with revenues coming at $30.0 billion on expectations of $30.4 billion, guiding Q1 ESP $0.68-$0.71 on expectations of $0.85) is no surprise to anyone who had followed the stock, and/or seen the recent dump of half of Seth Klarman's stake in the name (as was pointed out here previously). What was not only surprising, but shocking is that as part of its earnings announcement, HPQ took a $8.8 billion impairment charge to intangibles and earnings, primarily as a result of what it said was "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." As a reminder, HPQ bought Autonomy plc for $10.3 billion in August 2011. We now learn that anywhere between 50% and 80% of this purchase price was based on meaningless numbers and fraud. $10.3 billion is also about 40% of what HPQ's market cap will be when the stock opens down at least 10%. And this is how one destroys shareholder value. One in this case being the company's former CEO Leo Apotheker, whose executive decisions and lack of diligence have left the company in a state of complete disaster. What was Leo's punishment for his brief tenure on top of HPQ and swath of absolute value destruction? $25,000,000 in all in comp.

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Tue, 11/20/2012 - 08:54 | 2998299 GetZeeGold
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If your gonna buy HP.....make sure you get the extended warranty.

Tue, 11/20/2012 - 08:58 | 2998308 Zer0head
Zer0head's picture

what is a derrivative play on this, as in who depends on HP

Tue, 11/20/2012 - 09:01 | 2998317 ZippyBananaPants
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Fuck, now my HP-28 black ink is going to cost even more!

Tue, 11/20/2012 - 09:06 | 2998326 Zer0head
Zer0head's picture

but the red ink is on sale

Tue, 11/20/2012 - 10:37 | 2998574 economics9698
economics9698's picture

That HP ink cost more than the printer.

Tue, 11/20/2012 - 11:14 | 2998698 Bananamerican
Bananamerican's picture

"CEO Leo Apotheker, whose executive decisions and lack of diligence have left the company in a state of complete disaster-$25,000,000 in all in comp.

"fucking unions did it"-right wing ZHer

Tue, 11/20/2012 - 13:38 | 2999222 TruthInSunshine
TruthInSunshine's picture

From Leo Apotheker to Meg Whitman =  from the frying pan into the fire.

Bill Hewlett & Dave Packard shout "WTFbitchez!!!!" from their graves.


They should turn the quest for HP's next CEO (and COO) into a reality TV show, screening a pool of candidates exclusively from Wal-Mart Greeters.

"Who Wants to Be Hewlett-Packard's Next CEO?"

They could put them on a remote island, and have them compete in feats of enormous athletic and mental strain, to win prizes like Snickers candy bars, pizza & immunity.

Tue, 11/20/2012 - 11:48 | 2998801 realitybiter
realitybiter's picture

and that printer costs more than HPQ


its a value thing

Tue, 11/20/2012 - 09:08 | 2998329 Snidley Whipsnae
Snidley Whipsnae's picture

So... This news is good for how big a ramp job?

and, at ~ 6:30 am commodities (oil, PMs) came under extreme attack.


Tue, 11/20/2012 - 09:20 | 2998354 GetZeeGold
GetZeeGold's picture



Just a little payback for yesterday.....fair is fair.

Tue, 11/20/2012 - 12:04 | 2998841 goldfish1
goldfish1's picture

Waiting to hear the amount of the forthcoming bonuses.

Tue, 11/20/2012 - 12:31 | 2998970 Ident 7777 economy
Ident 7777 economy's picture







" If your gonna buy HP.....make sure ... "


Marked down for not even an inkling you tried to use a contraction:


It's YOU'RE not YOUR in the above ...

Tue, 11/20/2012 - 08:55 | 2998300 fonzannoon
fonzannoon's picture

Crazy Eddie was right in that interview with Laurern Lyster.

Tue, 11/20/2012 - 09:12 | 2998344 Robot Traders Mom
Robot Traders Mom's picture

Their debt has really started to trade off...It sticks out. Their only saving grace is about $4B in govt contracts...

Tue, 11/20/2012 - 08:56 | 2998302 Acet
Acet's picture

Wealth creators Bitchez!

Tue, 11/20/2012 - 08:57 | 2998303 orangegeek
orangegeek's picture

France downgrades.  HP takes a dump. NASDAQ100 is down one point this morning.




And the markets become a bigger farce that knows no bounds.

Tue, 11/20/2012 - 09:11 | 2998338 JPM Hater001
JPM Hater001's picture

Beer time?

Tue, 11/20/2012 - 10:22 | 2998517 exi1ed0ne
exi1ed0ne's picture

Today we salute you. Mr. Market manipulation guy.

(Mr. Market manipulation guy!)

Buying AAPL, NFLX, and UST puts, but still have time to troll on ZH.

(MDB is my hero!)

Sure it's a tough job, but creating bad market fiction is more than just a job for George Lucas.

(Han still shot first!)

You demonstrate your dedication and efficiency by squeezing shorts in the market and by watching tranny porn.

(Don't forget to wash that hand!)

So crack open an ice cold Bud Light, Mr. Market manipulation guy because we know that ramps only go one way - until YOU decide they don't.

Tue, 11/20/2012 - 11:45 | 2998793 Dave Thomas
Dave Thomas's picture

(Miieeesttterrr Maaarrkeeettt Manniuppuplaation Guuuuyyieeeee!)

Tue, 11/20/2012 - 10:26 | 2998535 nonclaim
nonclaim's picture

"And the markets become a bigger farce that knows no bounds."

That's the problem with computers and algos... it knows all about price but nothing about value. And has no shame for the blatant ignorance.

Tue, 11/20/2012 - 08:58 | 2998305 tawse57
tawse57's picture

Sadly, I see negative news for HPQ will give rise to AAPL's price today - especially with HPQ saying that the PC market is still struggling.

Hope I am wrong.

Tue, 11/20/2012 - 09:00 | 2998310 GetZeeGold
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Which means Samsung is gonna jack the price of components.

Tue, 11/20/2012 - 11:41 | 2998782 realitybiter
realitybiter's picture

'bout freakin time.


Have you seen the sox index lately?  component prices MUST rise sometime in the next decade -

 and all the numbnuts who have been walking around with virtually free handheld devices that 20 years ago would have been deemed supercomputers will suddenly be very appreciative....

Tue, 11/20/2012 - 11:30 | 2998754 Bananamerican
Bananamerican's picture

in this market, "everything is the opposite of what it shall be"...

it's designed to strip-mine assets....

....don't play tawse

Tue, 11/20/2012 - 08:58 | 2998307 lizzy36
lizzy36's picture

HPQ is currently in the process of firing 27,000 employees, as someone has to pay for the massive errors of the C-suite, accountants, lawyers and i-bankers, who all walked away from Autonomy deal with handsome pay-outs (i-bankers made what ......in excess of $30mm in fees on deal).

In other news anyone know where i can send my resume to get an 11 month $25mm job where all i have to do is destroy $30 BILLION in market cap.

Tue, 11/20/2012 - 09:01 | 2998318 Zer0head
Zer0head's picture

K/F has always had a knack for those kind of placements

Tue, 11/20/2012 - 09:03 | 2998323 max2205
max2205's picture

AAPL. They lost $160B in three months

Tue, 11/20/2012 - 09:12 | 2998341 GetZeeGold
GetZeeGold's picture



I'm sure they'd appreciate anything you could donate to them.

Tue, 11/20/2012 - 09:19 | 2998351 JPM Hater001
JPM Hater001's picture

Hi Lizzy-

I hear agents of the Rothchilds are well compensated...try applying there...I think you apply here:

33 Liberty Street New York, NY 10045

Tue, 11/20/2012 - 09:32 | 2998386 spastic_colon
spastic_colon's picture

apply for any of the positions that supposedly did any due diligence pre-closing

Tue, 11/20/2012 - 09:53 | 2998429 Who is John Galt
Who is John Galt's picture

Who the FUCK is John Galt?

Tue, 11/20/2012 - 10:09 | 2998477 GetZeeGold
GetZeeGold's picture



Where is John Galt?


I called the UN and France......he's not there.

Tue, 11/20/2012 - 10:33 | 2998560 Mrmojorisin515
Mrmojorisin515's picture

well if you had half a brain you'd realize that its always the unions fault, i learned that from the many genius posters on the twinkie story.  Management always gets what it deserves, always

Tue, 11/20/2012 - 11:23 | 2998702 Buckaroo Banzai
Buckaroo Banzai's picture

Whatever you think about the moral and ethical value of unions, they ALWAYS destroy economic value. It's an iron law of free-market economics.

Management, on the other hand, can either create value or destroy value, depending on the quality of the individuals involved.

There are a lot more effective business managers in the world than ineffective managers. Just about every company that was ever built was built by a management team that was at least marginally competent. Bad managers are drawn into large, successful organizations because that's the only place they can hide; they are quickly exposed in smaller, or marginally successful businesses.

Tue, 11/20/2012 - 11:25 | 2998738 Mrmojorisin515
Mrmojorisin515's picture

all i know is that "management" has destroyed the basic system we live in.  Lying just about everything they could think of, and when it blew up in their face we bailed them out with all "our" money.  Unions serve a purpose, working 12 hour days in steel mills was prob a living nightmare, along with living in tenemants that house how many people in one room. Unions are a tool of the many against the greedy to ask for a basic standerd of living. 

Tue, 11/20/2012 - 11:47 | 2998799 Buckaroo Banzai
Buckaroo Banzai's picture

Why don't you re-read what I wrote, but this time read for comprehension.

Tue, 11/20/2012 - 08:59 | 2998309 EscapeKey
EscapeKey's picture

Hugely bullish. This means there's even MORE monies on the sidelinez just WAITING to scoop up BARGAINS like 2,700 PE-ratio Amazon.

Tue, 11/20/2012 - 09:20 | 2998355 JPM Hater001
JPM Hater001's picture

You arent suggesting there fundamental problems at Amazon are you?

Tue, 11/20/2012 - 09:04 | 2998311 Cdad
Cdad's picture

The rot in this nation runs deeper than all the criminal syndicate Wall Street bankers running around computer arbitraging stocks.  It runs deep through the American corporate culture, where quarterly reports are elaborate lies, and dark pools are hired to turn those lies into millions of dollars for said liars.

One can dream that the dirt on Wall Street could someday be cleaned up, but when one realizes that the rot runs deep through all of big business, it gets much harder to understand how we could ever turn America's broken morality in the right direction.

Good luck out there, future flesh-eating zombies.

Tue, 11/20/2012 - 09:06 | 2998327 Quinvarius
Quinvarius's picture

Most people assume they will still be a human survivor in the zombie apocalypse.  Odds are, you will be a zombie.  Best to start stockpiling brains now and begin working on your zombie skills--And buy a bolt on kevlar helmet.

Tue, 11/20/2012 - 09:10 | 2998334 tawse57
tawse57's picture

Does it mean at some point in our futures we will have a close encounter with Lollipop Chainsaw?

Tue, 11/20/2012 - 09:55 | 2998434 Miss Expectations
Miss Expectations's picture
Title: Sheeps Brains - Roasted or Baked Categories: Yield: 4 Servings Four or six brains will be required for a dish. Prepare the brains as for stewing, and procure as many slices of bacon as there are brains. After they have been boiled and thrown in cold water, drain and dry them perfectly; brush over with oil, and roll them in highly seasoned bread crumbs. Put them in the bacon before the fire in a Dutch oven or bake in a well-heated oven, turning them about that they may be equally cooked, and basting them occasionally. When they are nicely browned take them up. Lay the slices on bacon on toast, put the brains on them and send sharp sauce or tomato sauce to the table in a tureen. Sufficient for six or seven persons.
Tue, 11/20/2012 - 10:29 | 2998540 exi1ed0ne
exi1ed0ne's picture

Reminds me of a song - Statistician's Blues:



Tue, 11/20/2012 - 09:39 | 2998396 Metalredneck
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Apparently , fraud is only bullish when a lot of whales make money from it.  Swindling by a few underlings is frowned upon.

Tue, 11/20/2012 - 09:00 | 2998312 max2205
max2205's picture

They paid $8 bill too much. How many $Bill too much did they pay for Compaq?

This is the old transfer of wealth ploy. You ain't seen nothing till Obammy gets going.

Tue, 11/20/2012 - 09:11 | 2998333 thepigman
thepigman's picture

Actually 9B too much and that's probably being very kind accounting for

the remaining pile of junk HP is left with:-)

Tue, 11/20/2012 - 09:34 | 2998391 spastic_colon
spastic_colon's picture

they took a page out of the AOL/time warner deal.....it you ain't got it, spend it!

Tue, 11/20/2012 - 09:00 | 2998314 Never One Roach
Never One Roach's picture

"Fraud never sleeps."


Seems to be both rampant and rampantly ignored by the DOJ and the SEC.

Tue, 11/20/2012 - 11:18 | 2998705 Bananamerican
Bananamerican's picture

don't worry NOV, "our boys" are on it...lol

...and corporate fraud is a proven moneymaker in amerika

Tue, 11/20/2012 - 09:01 | 2998315 LongSoupLine
LongSoupLine's picture

Bernanke badger don't care...


Operation "bonus pool ramp-o-thon" remains a go! 

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