Hewlett-Packard said on Tuesday that it had taken an $8.8 billion accounting charge, after discovering “serious accounting improprieties” and “outright misrepresentations” at Autonomy, a British software maker that it bought for $11.7 billion last year.
It is a major setback for H.P., which has been struggling to turn around its operations and remake its business.
The charge essentially wiped out its profit. In the latest quarter, H.P. reported a net loss of $6.9 billion, compared with a $200 million profit in the period a year earlier. The company said the improprieties and misrepresentations took place just before the acquisition, and accounted for the majority of the charges in the quarter, more than $5 billion.
Hewlett-Packard bought Autonomy in the summer of 2011 in an attempt to bolster its presence in the enterprise software market and catch up with rivals like I.B.M. The takeover was the brainchild of Leo Apotheker, H.P.’s chief executive at the time, and was criticized within Silicon Valley as a hugely expensive blunder. Mr. Apotheker resigned a month later.
Since then, H.P. has moved to revive the company. Last year, Meg Whitman, a former head of eBay, took over as chief executive and began rethinking the product lineup and global marketing strategy.
But the efforts have been slow to take hold. In October, Ms. Whitman told Wall Street analysts that revenue and profit would be significantly lower, adding that it would take several years to complete a turnaround.
“We have much more work to do,” Ms. Whitman said at the time.
The strategic troubles have weighed on the stock. Shares of H.P. have dropped to about $13 from nearly $30 at their high this year. After Tuesday’s announcement, the stock continued to plunge in premarket trading, dropping nearly 11 percent.
The latest results could present another setback for Ms. Whitman’s efforts.
The company said it began looking into potential accounting problems in the spring, after a senior Autonomy executive came forward. H.P. then hired a third-party forensic accounting firm to conduct an investigation.
Hewlett-Packard has turned over its findings to Securities and Exchange Commission in the United States and the Serious Fraud Office in Britain. In a conference call with analysts, Ms. Whitman said the company might consider legal actions against several parties.
A spokesman for Mike Lynch, former chief executive of Autonomy, did not have an immediate comment.
More broadly, Hewlett-Packard continues to face weakness in its core businesses. Revenue for the full fiscal year dropped 5 percent, to $120.4 billion, with the personal computer, printing, enterprise and service businesses all losing ground. Earnings dropped 23 percent, to $8 billion, over the same period.
“As we discussed during our securities analyst meeting last month, fiscal 2012 was the first year in a multiyear journey to turn H.P. around,” Ms Whitman said in a statement. “We’re starting to see progress in key areas, such as new product releases and customer wins.”
DealBook: Hewlett-Packard Takes Big Hit on ‘Improprieties’ at Autonomy
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DealBook: Hewlett-Packard Takes Big Hit on ‘Improprieties’ at Autonomy
