Less than a decade ago HPQ ripped off Gabor S. Acs, the worlds first trillionaire by failing to put Talieh Safadi in prison for a $70 million asset theft/ fraud, and theft of a $65,000 a year contract with Egypt Telecom and HPQ then owned by Telynx Inc.
How Karmic that HPQ should write down exactly $8.8 billion when Gabor Acs was pitching Soros Fund Management on investing in an $8.8 billion IPO of Penny King Holdings and Penny King Productions.
From Soros and Me!
From Investors Hub:
From Seeking Alpha aka See King Alpha
2:59 AM The FBI is reportedly investigating H-P's (NYSE:HPQ) accusations ofaccounting improprieties at Autonomy prior to H-P buying it and for which the company took an $8.8B charge in FQ4. The feds are responding to a request from the SEC after H-P brought its claims to the regulator. Don't be surprised if more government agencies jump onto the investigative bandwagon.
Tuesday 5:43 PM "When HP bought Autonomy it had hundreds of people involved in due diligence," claims ex-Autonomy CEO Mike Lynch, who again denied any wrongdoing in a phone interview. Lynch also claims H-P's (HPQ -11.9%) "mismanagement" was responsible for the huge drop in Autonomy license revenue that followed the acquisition, as it drove off employees, introduced "arbitrary markups," and failed to incentivize its sales force. H-P's list of allegations against Autonomy is lengthy - no one is looking good here at this point. (more on HPQ)
From Yahoo Finance:
Hewlett-Packard (HPQ) shares tumbled 12% to a 10-year low Tuesday after the company announced a shocking $8.8 billion write-down and dismal quarterly results.
In 2011, HP acquired London's Autonomy for $11 billion in a bid to move deeper into software and services. HP now says it was duped, citing "serious accounting improprieties" in announcing the write-down, of which over $5 billion was related to accounting issues and the rest due to the division's poor performance.
HP's founder Michael Lynch vehemently (and publicly) disputed HP's claim of wrongdoing, leading many observers to wonder whether HP was really the victim of accounting fraud (a word the company notably hasn't used) or is just using these alleged accounting issues as an excuse to mask its poor performance.
"The mind boggles as to where the snafu was," says Barry Ritholtz, CEO of Fusion IQ and author ofThe Big Picture blog, who notes the accounting industry is once again left with another black eye - and with shareholders holding the bag. "I'm not just talking about HP," he says. "This is a mainstream part of finance and quite frankly an embarrassing debacle."
Beyond questions over the potential failings of audit firms Deloitte UK and KPMG, HP's board and its finance team, "to me this is just another bad HP acquisition," Ritholtz says. "They were once a wonderful, storied company. Now they need to figure out who they are."
For shareholders, this is the critical question because the Autonomy write-down and drama over the allegations served to somewhat obscure another lousy quarter for HP overall.
For its fiscal fourth quarter, HP reported poor performance across the board as revenues fell in its PC, printer, services, and server and networking divisions. HP reported a 7% drop in revenue vs. a year ago and a whopping loss of $6.9 billion.
For the full fiscal year ended Oct. 31, HP's overall revenues dropped 5% while earnings dropped 23%.
Tuesday's swoon comes on the heels of another big drop in October when the company cut its fiscal 2013 guidance and CEO Meg Whitman talked about a long, slow turnaround process.
After the earlier decline, many analysts declared HP to be "cheap."
At around $12, The WSJ notes HP now trades at 6 times its enterprise value, which includes factors such as debt. But that compares to 9.7 times for Apple (AAPL), which is growing much faster and has a rock-solid balance sheet.
"HP is the epitome of a value trap," says Ritholtz, who has no position (long or short) in the stock. "The stock has been in a relentless downtrend for a decade, has a history of making horrific acquisitions and is in a space that's pretty much been devastated by tablets in general and Apple specifically."
Looking forward, the best chance for the company is to transform itself into an "IBM-like services company," he continues. "But I don't know if they have ability, or the skills or the management team to do that."
Considering both the deals for Autonomy and EDS - which the company took a separate $8 billion write-down this year - were designed to do just that, it's a fair question and skepticism is warranted.
Aaron Task is the host of The Daily Ticker and Editor-in-Chief of Yahoo! Finance. You can follow him on Twitter at @aarontask or email him at email@example.com.
HPQ has been added to the $500 Trillion Class Action filed against the SEC and US Treasury as a result of all this stock jinxing. Alex S. Gabor & Associates hereby officially advises George Soros Senior to short a billion shares of HPQ till the dust settles.