Ahead of the Bell: Hewlett-Packard
Hewlett-Packard Co. says that the Department of Justice is investigating HP’s business software unit Autonomy, which the computer maker has accused of fudging its accounting.
HP said in a filing with the Securities and Exchange Commission late Thursday that it was informed by representatives of the Justice Department on Nov. 21 that the department had opened an investigation into Autonomy. The technology company also said that it provided information to the U.K. Serious Fraud Office and the SEC related to what it said were accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred before and in connection with its acquisition of the company.
HP, which acquired Autonomy for $10 billion in 2011, took an $8.8 billion charge to reflect that the U.K. company isn’t worth what it paid. About $5 billion of that charge stemmed from improper accounting, according to HP.
Autonomy founder and former CEO Mike Lynch quickly fired back. He responded in a statement Thursday that HP had not provided a detailed calculation of its $5 billion write-down of Autonomy, or published any explanation of the allegations made against former management. A copy of the statement was posted on Forbes magazine’s website.
Lynch has said that the allegations made against Autonomy by HP are false.
The difficulties with Autonomy are not the Palo Alto, Calif., company’s only problems. Other acquisitions have not worked out as hoped, and HP’s core PC and printer business has faltered as consumers choose smartphones and tablet computers rather than notebooks and desktop PCs.
HP’s stock fell 28 cents, or 2 percent, to $13.76 in morning trading Friday. The company has lost nearly half its market value this year.