14 DAY TRIAL // Back in October 2011, HP spent $11.1 billion / €8.21 billion to buy customer and data management software company Autonomy, but now the company thinks it spent $8.8 billion / €6.51 billion too much.
The reason for that conclusion lies in accounting improprieties related to the profits, which is a technical way of saying that Autonomy lied about how well it was doing.
Autonomy's finances had been audited twice before the acquisition, by external firms KPMG and Deloitte.
Both firms found no irregularities, but HP says that its most recent audit lowered the revenue and profit results for 2010 and 2011 by a major amount. Ernst & Young was the company that looked at the finances this time around.
According to Hewlett-Packard, Autonomy did not make £175.6 million as it claimed ($286.8 million / €212.16 million), but £81.3 million ($132.7 million / €98.17 million).
Also, the new statements slashed the profit from £105.7 million ($172.6 million / €127.68 million) to £19.6 million ($32 million / €23.67 million) for 2010.
Basically, HP feels it was pretty badly scammed, so it has filed for a £38.4 million ($62.7 million / €46.38 million) tax rebate, to return charges paid in 2009 and 2010. HP says that the charges were incorrectly inflated by overstated profits.
Unfortunately, the British tax office, Her Majesty's Revenue and Customs, hasn't offered the requested money yet. Alas.
2011 wasn't an easy year for HP. Not only did it suffer this problem, but it also tried to leave the PC market all of a sudden, only for the CEO to get sacked and replaced by Meg Whitman, who reversed the move, but not before share value was damaged beyond recognition.
HP says that Autonomy's 2011 financials also show irregularities, but it hasn't filed that paperwork yet. No doubt we'll learn more in the coming weeks.