HP records 8.8 billion non -cash charge for impairment of goodwill and intangible assets with its Software segment- serious accounting improprieties , disclosure failures , outright misrepresentations alleged against Autonomy Corp Plc. , purchased by HP about a year ago.

http://www.zerohedge.com/news/2012-11-20/deloittes-2011-autonomy-independent-auditor-all-clear-sign

Deloitte's 2011 Autonomy Independent Auditor "All Clear" Sign Off

Submitted by Tyler Durden on 11/20/2012 08:19 -0500

• European Union
 
• Ireland
 
• United Kingdom

For your Athur Anderson nostaglia pleasure, we present Deloitte's February 2011 sign off on the firm's 2011 full year results:

* * *

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUTONOMY CORPORATION PLC

We have audited the financial statements of Autonomy Corporation plc for the year ended 31 December 2010 which comprise the Consolidated Income Statement, the Consolidated and Company Statements of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Cash Flow Statements, the consolidated related notes 1 to 33 and the Parent Company related notes 1 to 10. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance  that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2010and  of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
• Separate opinion in relation to IFRSs as issued by the IASB
  As explained in note 2 to the group financial statements, the group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
  In our opinion the group financial statements comply with IFRSs as issued by the IASB.
  Opinion on other matters prescribed by the Companies Act 2006
  In our opinion:

  • the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and 
  • the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

  Matters on which we are required to report by exception

  We have nothing to report in respect of the following.

  Under the Companies Act 2006 we are required to report to you if, in our opinion:

  • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
  • the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or
  • certain disclosures of directors’ remuneration specified by law are not made; or
  • we have not received all the information and explanations we require for our audit.
  • Under the Listing Rules we are required to review:
    • the directors’ statement contained within the Directors’ Report and note 3 in relation to going concern;
    • the part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the June 2008 Combined Code specified for our review; and
    • certain elements of the report to shareholders by the Board on directors’ remuneration.
    
    
    Nigel Mercer (Senior Statutory Auditor)
    for and on behalf of Deloitte LLP
    Chartered Accountants and Statutory Auditor
    Cambridge, England
    22 February 2011

http://www.zerohedge.com/news/2012-11-20/hewlett-packard-implodes-after-disclosing-accounting-fraud-autonomy-plc-business

Hewlett Packard Implodes After Disclosing Accounting Fraud At Autonomy plc Business

Submitted by Tyler Durden on 11/20/2012 07:53 -0500

That Hewlett Packard would miss results (it did, with revenues coming at $30.0 billion on expectations of $30.4 billion, guiding Q1 ESP $0.68-$0.71 on expectations of $0.85) is no surprise to anyone who had followed the stock, and/or seen the recent dump of half of Seth Klarman's stake in the name (as was pointed out here previously). What was not only surprising, but shocking is that as part of its earnings announcement, HPQ took a $8.8 billion impairment charge to intangibles and earnings, primarily as a result of what it said was "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term." As a reminder, HPQ bought Autonomy plc for $10.3 billion in August 2011. We now learn that anywhere between 50% and 80% of this purchase price was based on meaningless numbers and fraud. $10.3 billion is also about 40% of what HPQ's market cap will be when the stock opens down at least 10%. And this is how one destroys shareholder value. One in this case being the company's former CEO Leo Apotheker, whose executive decisions and lack of diligence have left the company in a state of complete disaster. What was Leo's punishment for his brief tenure on top of HPQ and swath of absolute value destruction? $25,000,000 in all in comp.

and....





http://www.businessinsider.com/hp-falling-after-weak-outlook-2012-11

( 10.2 billion deal , 8.8 billion charge off  !  And HP swings and misses on guidance for Q1 2013 to boot ! )

HP SHARES PLUNGE: Company Whiffs On Guidance And Takes HUGE Charge Over Accounting 'Improprieties'

Joe Weisenthal | 36 minutes ago | 894 | 

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AP HP CEO Meg Whitman

Troubled tech giant HP has announced a disastrous earnings report.

The company is falling nearly 10% 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.

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.

http://finance.yahoo.com/news/hp-reports-fourth-quarter-full-123000000.html

PALO ALTO, CA--(Marketwire - Nov 20, 2012) - HP ( NYSE : HPQ ) 

• Full year fiscal 2012 non-GAAP diluted earnings per share of $4.05, within the previously provided outlook of $4.05 to $4.07 
• Full year fiscal 2012 GAAP loss per share of $6.41
• Full year fiscal 2012 net revenue of $120.4 billion, down 5% from the prior-year period and down 4% when adjusted for the effects of currency
• Fourth quarter non-GAAP diluted earnings per share of $1.16, down 1% from the prior-year period
• Fourth quarter GAAP loss per share of $3.49
• Fourth quarter net revenue of $30.0 billion, down 7% from the prior-year period and down 4% when adjusted for the effects of currency
• Cash flow from operations of $4.1 billion, up 69% from the prior-year period
• Returned $384 million in cash to shareholders in the form of dividends and share repurchases
• Fourth quarter and full year fiscal 2012 results include a non-cash goodwill and intangible asset impairment charge of $8.8 billion relating to the Autonomy business within the Software segment

HP fourth quarter and full year 2012 financial performance
		Q4FY12		Q4FY11		Y/Y		FY12		FY11		Y/Y
GAAP net revenue ($B)		$30.0		$32.1		(7%)		$120.4		$127.2		(5%)
GAAP operating margin		(21.7%)		2.5%		(24.2 pts.)		(9.2%)		7.6%		(16.8 pts.)
GAAP net (loss) earnings ($B)		($6.9)		$0.2				($12.7)		$7.1
GAAP (loss) diluted EPS		($3.49)		$0.12				($6.41)		$3.32
Non-GAAP operating margin		10.4%		9.7%		0.7 pts.		9.3%		10.8%		(1.5 pts.)
Non-GAAP net earnings ($B)		$2.3		$2.4		(3%)		$8.0		$10.4		(23%)
Non-GAAP diluted EPS		$1.16		$1.17		(1%)		$4.05		$4.88		(17%)

Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below. HP today announced financial results for its fourth fiscal quarter and full fiscal year ended Oct. 31, 2012. For the full year fiscal 2012, net revenue of $120.4 billion was down 5% from the prior-year period and down 4% when adjusted for the effects of currency. Full-year GAAP loss per share was $6.41, down from diluted earnings per share (EPS) of $3.32 in the prior-year period. Full-year non-GAAP diluted EPS was $4.05, down 17% from the prior-year period. Full year non-GAAP earnings information excludes after tax costs of $20.7 billion, or $10.46 per diluted share, related to the impairment of goodwill and purchased intangible assets, restructuring charges, amortization of purchased intangible assets, charges relating to the wind down of non-strategic businesses and acquisition-related charges. For the fourth quarter, net revenue of $30.0 billion was down 7% year over year and down 4% when adjusted for the effects of currency.  Fourth quarter GAAP loss per share was $3.49, down from diluted EPS of $0.12 in the prior-year period. Fourth quarter non-GAAP diluted EPS was $1.16, down 1% from the prior-year period. Fourth quarter non-GAAP earnings information excludes after-tax costs of $9.1 billion, or $4.65 per diluted share, related to the impairment of goodwill and purchased intangible assets, restructuring charges, amortization of purchased intangible assets and acquisition-related charges. "As we discussed during our Securities Analyst Meeting last month, fiscal 2012 was the first year in a multiyear journey to turn HP around," said Meg Whitman, HP president and chief executive officer. "We're starting to see progress in key areas, such as new product releases and customer wins. We're particularly pleased that in Q4, we were able to improve our balance sheet, generating $4.1 billion in operating cash flow, and we returned $384 million to shareholders in the form of share repurchases and dividends." Fourth Fiscal Quarter 2012 Business Group Results Personal Systems revenue was down 14% year over year with a 3.5% operating margin. Commercial revenue decreased 13%, and Consumer revenue declined 16%. Total units were down 12% with both Desktops and Notebooks units down 12%. Printing revenue declined 5% year over year with a 17.5% operating margin. Total hardware units were down 20% year over year. Commercial hardware units were down 15% year over year, and Consumer hardware units were down 22% year over year. Services revenue declined 6% year over year with a 14.2% operating margin. Technology Services revenue was down 4% year over year, Application and Business Services revenue was down 7% year over year, and IT Outsourcing revenue declined 6% year over year. Enterprise Servers, Storage and Networking (ESSN) revenue declined 9% year over year with an 8.3% operating margin. Networking revenue was up 7%, Industry Standard Servers revenue was down 7%, Business Critical Systems revenue was down 25%, and Storage revenue was down 13% year over year. Software revenue grew 14% year over year with a 27.2% operating margin, including the results of Autonomy. Software revenue was driven by 9% license growth, 9% support growth, and 48% growth in services. HP Financial Services revenue grew 1% year over year as a 3% increase in net portfolio assets was offset by an 11% decrease in financing volume. The business delivered a 10.8% operating margin. Asset ManagementHP generated $4.1 billion in cash flow from operations in the fourth quarter. Inventory ended the quarter at $6.3 billion, with days of inventory down 2 days year over year to 25 days. Accounts receivable of $16.4 billion was down 2 days year over year to 49 days. Accounts payable ended the quarter at $13.4 billion, up 1 day from the prior-year period to 53 days. HP's dividend payment of $0.132 per share in the fourth quarter resulted in cash usage of $260 million. HP also utilized $124 million of cash during the quarter to repurchase approximately 7.6 million shares of common stock in the open market. HP exited the quarter with $11.8 billion in gross cash. HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of approximately $8.8 billion in the fourth quarter of its 2012 fiscal year. The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge. OutlookFor the first quarter of fiscal 2013, HP estimates non-GAAP diluted EPS to be in the range of $0.68 to $0.71 and GAAP diluted EPS to be in the range of $0.34 to $0.37. First quarter fiscal 2013 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.34 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges. For the full year fiscal 2013, HP estimates a non-GAAP diluted EPS to be in the range of $3.40 to $3.60 and GAAP diluted EPS to be in the range of $2.10 to $2.30, in line with HP's previously communicated outlook. Full year fiscal 2013 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $1.30 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges. More information on HP's earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home. HP's Q4 FY12 earnings conference call is accessible via an audio webcast atwww.hp.com/investor/2012Q4webcast.