HP Botches Earnings Prediction; Finds 'Improprieties” In Autonomy Acquisition
By David Zielenziger | November 21, 2012 12:49 AM EST
Hewlett-Packard Co. (NYSE: HPQ), the No. 1 computer company, reported fourth-quarter and annual results below estimates and announced an even bigger writedown than expected due to “accounting improprieties” discovered in a 2011 acquisition.
Moreover, CEO Margaret Whitman issued a dismal first-quarter forecast and warned, as she had Oct. 3, “HP is on a multi-year journey to return to profitability.”
The Palo Alto, Calif., company said its fourth-quarter net loss was $6.85 billion, or $3.49 a share, including the new $8.8 billion writedown of essentially the entire cost of acquiring Autonomy of the UK in fiscal 2011. A year ago, fourth-quarter net income was $2.39 or 12 cents a share.
On operations, HP said its profit was $1.16 a share, two cents above some estimates but below many others. Revenue fell to $30 billion from $32.12 billion a year ago.
For the year ended Oct. 31, HP reported a record loss of $12.65 billion, or $6.41 a share, compared with prior-year net income of $7.07 billion, or $3.32 a share.
CFO Cathie Lesjak said first-quarter earnings on operations will range between 68 cents and 71 cents a share, as outlined to analysts in the Oct. 3 presentation. Full-year estimates, she said, remain for operating profit between $2.10 and $2.30 a share.
CEO Whitman said she was “astounded” by the accounting improprieties found at Autonomy, which she said had been reported to the U.S. Securities and Exchange Commission and to British authorities.
“Both executives who approved the deal aren't here any more,” Whitman told analysts during an early Tuesday conference call. She referred to former Leo Apotheker, who was fired in Sept. 2011, as well as the company's former head of software.
Shares of HP fell about 10 percent in early trading, to $11.98, down $1.32.
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