HP's fight to stay on top

HP has suffered major setbacks in the past years, whether it be a rotating door or CEOs or acquisitions gone bad. Former CEO Leo Apotheker put the company in a tailspin when he announced plans to sell off the personal computing division, then made an $11 billion dollar mistake with the purchase of a British software firm, Autonomy, before he was fired. It was almost a perfect storm, Mr. Apotheker started in Nov, 2011 then Jan. 2012 five new board members joined HP. The new board members had two major decisions to make, sell off the $40 billion personal computer business and/or the purchase of the software firm. The board split itself into two groups to deal with these major decisions and purchased Autonomy in Aug. 2012. In this same month HP announced it was looking for a buyer to the PC division of the company which stockholders had a strong negative reaction to, forcing the stock to plummet 20%. Apotheker was fired in Sept. 2012 and HP decided to keep its PC division.

While HP was working on negotiations with the software firm, Autonomy gave very little accounting information to HP citing UK corporate rules, however Autonomy reassured their accounting had been audited for years because it is a public company was in good standing. KPMG, a company that helped HP with its due diligence conversed with a firm that audited Autonomy for sometime mentioned there may be some improper accounting at the firm, however the review of these accounts was found to be baseless. The group from HP did not investigate this any further.

 

In the months following the purchase of the software firm HP kept Mr. Lynch, the CEO of Autonomy to run this division, but Autonomy started missing its sales targets. The current CEO Meg Whitman went to Britain to find out what the problems were. It was only two weeks later and Mr. Lynch was fired. HP heard from executives at Autonomy that because of its improper accounting the value of the firm was over inflated. HP then went to the Justice Department, the SEC, and UK's Fraud office. As of now none of these government departments have make and public announcements.

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