HP Posts Horrific Guidance, Will Take $8.8B USD Hit on "Improprieties"
November 20, 2012 9:27 AM
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Léo Apotheker's legacy continues to haunt troubled PC maker
It's been a hard fall from grace for troubled personal computer giant Hewlett-Packard Comp. (
). After the board booted successful CEO Mark Hurd for an
illicit office affair
marketing contractor-cum-ex-adult film star
, it made the disastrous decision to hire Léo Apotheker, an executive with a troubled past and little experience in the America market.
I. Léo Apotheker: The Disaster That Keeps on Giving
current CEO Meg Whitman
(formerly CEO of eBay, Inc. (
) during its formative years)
tries to right the ship with record layoffs
, HP has shaken investor confidence with a dire Q1 earnings
, a forecast that once more dredges up the ugly legacy of Mr. Apotheker.
Mr. Apotheker came to HP shortly after being essentially fired from German enterprise software giant SAP AG (
). He was fired after only a year as CEO on allegations that he turned a blind eye to software theft, was belligerent to trade unions, and generally mismanaged the company's finances.
Nonetheless, HP -- perhaps eyeing Mr. Apotheker's more successful years at SAP before his ascent to its top post -- took the plunge, recruiting the ousted German CEO,
setting aside the large culture gap and his poor track record
. The board then watched idly as Mr. Apotheker made plans to
spin off HP's core consumer PC business
and acquire UK software giant Autonomy Corp. plc.
for $10.3B USD in 2011
. Mr. Apotheker also triggered HP's exit from the mobile device market,
shuttering the product line
of the recently acquired Palm unit.
Meg Whitman has been unable to salvage HP's bottom line, thus far.
[Image Source: Fortune MPW]
Those decisions led one former board chairman to suggest HP was
trying to "commit corporate suicide"
led to a lawsuit
from outraged shareholders. The criticism eventually moved the sluggish board to react; Mr. Apotheker was outed from the CEO spot at a major tech company for the
second time in two years
II. A $8.8B Hit on "Improprieties"
But his legacy lives on.
In its earnings guidance HP announced that it expects to take a massive $8.8B USD write-down due to "accounting improprieties". The guidance reads:
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.
Analysts had been expecting around $0.87 USD/share earnings. With the massive write-down, EPS are expected to dip to between $0.68 and $0.71 USD/share.
This Autonomy poster seems rather ironic in retrospect, considering the software company is alleged to have duped HP out of billions via bad accounting. [Image Source: Autonomy]
As the company approaches its fiscal Q1 2013, the holidays bring little joy to HP. The company looks set to lose its top spot to the Hong Kong-based Lenovo Group, Ltd. (
). Gartner Inc.'s (
) numbers indicated that
Lenovo already passed HP last quarter
, although the other major reporting agency, the IDC Group
HP clung to a narrow lead. Given the trends, though, it is expected Lenovo will be well ahead of HP in unit sales for calendar Q4 2012 (fiscal Q1 2013 for HP).
HP shares have plunged 10 percent in pre-market trading. Analysts were already pessimistic, as the
previous earnings guidance
was consider weak. If that one was consider weak, though, this one can only be regarded as an utter disaster for the Palo Alto-based hardware veteran.
HP on MarketWire
This article is over a month old, voting and posting comments is disabled
RE: HP KNEW what they were getting....
11/20/2012 12:23:00 PM
Surely, Leo was a disaster but, don't forget that it was Mark Hurd who started the shopping spree after he realized that cutting R&D cost this much had just killed HP's innovation for good. Hurd basically burned the furniture and tried to fixed his screw up with acquisitions. He bought EDS for $13.9 billions in 2008 (overpaid 8 billions for it) and then in 2010 he bought Palm for 1.2 Billions right before getting fired for misconduct.
RE: HP KNEW what they were getting....
11/20/2012 2:53:55 PM
Hurd correctly foresaw the future of computing as being in the mobile space but was ousted before he could fully realise that vision. Apothekar starved Palm of support, then shut it down after it failed instead of investing in it. At the time I always thought the Autonomy was overvalued, glad to have been proven right. It's a shame a fraction of that money wasn't used to fix webOS and Palm. HP are now paying for that in more ways than one, shrinking PC market and reliance on a hardware competitor (M$) for operating software.
"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs
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