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HP Takes $8.8 Bn Hit, Alleges Fraud In Autonomy

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Hewlett-Packard stunned Wall Street by alleging a massive accounting scandal at its British software unit Autonomy that will cost the company the majority of $8.8 billion in charges. It was the latest in a string of reversals that have renewed questions about the basic competence of the storied company's board and senior managers. 
 
"HP is extremely disappointed to find that some former members of Autonomy's management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy's acquisition by HP," the technology giant said in a statement.
 
HP said on 20 November it discovered "serious accounting improprieties" and "a willful effort by Autonomy to mislead shareholders," after a whistleblower came forward following the ouster of Autonomy's then-chief executive, Mike Lynch, in May. 
 
The company announced "a non-cash impairment charge of $8.8 billion related to Autonomy in the fourth quarter of its 2012 fiscal year." 
 
"The majority of this impairment charge, more than $5 billion is linked to serious accounting improprieties, misrepresentation and disclosure failures discovered by an internal investigation by HP and forensic review into Autonomy's accounting practices prior to its acquisition," it added. The balance of the impairment charge is linked to the recent trading value of HP stock and headwinds against anticipated synergies and marketplace performance.
 
Shares of HP crashed by nearly 12 per cent in early trade after the company revealed tehe development which was attributed for the net loss in fourth quarter. For the fourth quarter ended 31 October, HP registered a net loss of $6.9 billion compared to a profit of $0.2 billion in the same period last year. HP said it has referred the matter to the US Securities and Exchange Commission's Enforcement Division and the UK's Serious Fraud Office for civil and criminal investigation.
 
It had launched an internal investigation into these issues after a senior member of Autonomy's leadership team came forward, following the departure of Autonomy founder Mike Lynch, it added.
 
(Agencies) 
 


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