In Wednesday?s New York Times, Quentin Hardy and Michael J. de la Merced report on Hewlett-Packard?s accusations that Autonomy, a British software maker it purchased last year, had engaged in ?serious accounting improprieties.? Before the deal, H.P. says, Autonomy inflated its sales; the problems went undetected by outside accountants ? both Autonomy?s auditors and a firm H.P. hired to vet the deal.
The news came on the day that Hewlett released its quarterly earnings report. The company reported a $6.9 billion loss, dragged down by the Autonomy mess and continuing problems in the business that resulted in an overall charge of $8.8 billion. On Tuesday, the stock continued falling, dropping 12 percent to less than $12, its lowest point since 2002.
Now, the Autonomy matter has been referred to regulators in two countries, and the Federal Bureau of Investigation has opened a case, according to people briefed on the matter who were not authorized to speak publicly. H.P. is also considering its own legal action. ?This took time? to uncover, said Meg Whitman, H.P.?s chief executive. The issues, she said, ?were designed to be hidden.?
On DealBook, Peter Eavis reports that the accusations are eerily reminiscent of accounting missteps uncovered at software firms during the tech bubble over a decade ago, suggesting that there is something about the software business that makes it easier for executives to indulge in questionable accounting.
Hewlett can?t escape the onslaught of bad news.?In recent years, what was once a giant of Silicon Valley has been buffeted by management turnover, board controversy and waning profits. The company, which previously rivaled the likes of I.B.M., Cisco and SAP, has watched the value of its stock erode sharply.
Even before the accounting problems, the acquisition of Autonomy, which sells software that examines data for patterns,?looked troubled. Within weeks, the deal contributed to the downfall of the chief executive at H.P. and led to squabbles among company?s directors, including Ms. Whitman, who took over in September 2011.
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