Can Hewlett-Packard Get Rid of Autonomy?
If current reports are accurate, Hewlett-Packard (NYSE:HPQ) will be able to get its struggling Autonomy unit off its hands. Sources familiar with the matter told The Wall Street Journal that the technology company had received offers from interested parties for the unit, the very division that H-P alleged misrepresented its finances, necessitating a multi-billion dollar write-down in the company’s fourth quarter last November.
Even though the report has not been substantiated, investors have reacted positively to the news that H-P may rid itself of the division that essentially wiped out all the profit the company made that quarter. Shares rose more than four percent after the article’s publication on Wednesday, and closed at $17.21. The stock has dropped 64 percent over the last two years due to several missteps, including the Autonomy acquisition.
According to the Journal’s sources, the potential buyers include several United States-based technology companies or their representatives. Another of the company’s struggling divisions, EDS, which was purchased in 2008 for $13.9 billion, has received offers as well.
No comment has been made by H-P regarding the offers, but chief executive officer Meg Whitman was not interested, reported the publication. Whitman was described by its sources as not being “in selling mode.” However, in a December filing with the U.S. Securities and Exchange Commission, the company acknowledged that it would consider divesting some assets “that may no longer help us meet our objectives.”
As the company’s traditional computer business had already begun to slow by the time former chief executive Leo Apotheker took office in 2010, he was given the task of moving H-P in a new direction. He looked to acquisitions as a means to transform the company’s business and eventually settled on Autonomy as the vehicle to launch the company into the software field.
But Apotheker was fired before the deal closed, and Whitman accused Autonomy of accounting improprieties, making it clear that the unit had done little to fulfill H-P’s objective of becoming a software powerhouse. With the current problems stemming from the acquisition, H-P is unlikely to recoup much of the $11 billion it spent on Autonomy if the unit is sold.
Besides a sale, H-P has one other alternative pending: the company announced in December that the U.S. Justice Department had begun an investigation into Autonomy on November 21.
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