Troubled tech giant HP has announced a disastrous earnings report.
The company is falling nearly 11% in the pre-market after ugly guidance, and a massive $8.8 billion writeoff at Autonomy, a British software company it acquired in 2011 for just over $10 billion.
The release blames accounting "improprieties" at the company that occurred prior to HP's acquisition.
Here's the key line from the release on the charge:
The charge relates to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy that occurred prior to HP's acquisition of Autonomy and the trading value of HP stock during the period preceding the recording of the charge. In the third quarter of fiscal 2012, HP recorded an impairment charge for the goodwill associated with its Services segment following an impairment review driven by, among other things, the trading value of HP stock during the period preceding the recording of the charge, market conditions and business trends within that segment.
This will definitely raise huge questions about the due diligence that was done on the deal. On the call, the company said it will pursue criminal charges in the UK.
And besides this charge, the business also looks fundamentally bad.
For Q1, the official Wall Street consensus is 87 cents per share. Their guidance is much worse
For the first quarter of fiscal 2013, HP estimates non-GAAP diluted EPS to be in the range of $0.68 to $0.71.
