Hewlett-Packard (NYSE:HPQ) may have beaten earnings expectations on Tuesday, but only by excluding a significant accounting charge related to allegations of fraud tied to its Autonomy Corp. software unit.
Alleged accounting “improprieties” at the acquired company led to a one-time accounting charge of $8.8 billion, Hewlett-Packard said. The charge is linked to the “associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term,” the company said in a statement.
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Along with the “serious accounting improprieties,” there were also “disclosure failures” and “outright misrepresentations” at Autonomy that occurred prior to its acquisition for $11.5 billion in 2011 and were discovered by a nearly seven-month-long internal investigation. The investigation was launched after a senior member of Autonomy came forward, H-P said.
After the earnings announcement, shares tumbled in pre-market trading.
Hewlett-Packard posted fiscal fourth-quarter earnings excluding items of $1.16 per share, down from $1.17 per share in the year-ago period. Revenue was down to $29.96 billion from $32.12 billion a year earlier as the company’s share of the PC market shrank.
Analysts had expected H-P to report earnings excluding items of $1.14 per share on $30.43 billion in revenue, according to Thomson Reuters.
Investing Insights: Hewlett Packard Earnings: Profit and Revenue Dip Depresses Investors.