Are Hewlett-Packard Company (HPQ)’s Losses in Autonomy Deal Deloitte’s Fault?


Hewlett-Packard Company (NYSE:HPQ) is facing heat from its shareholders because of its acquisition of Autonomy and the company is now shifting the blame on the auditor it hired for the transaction, Deloitte. Hewlett-Packard Company (NYSE:HPQ) is planning to file a lawsuit against Deloitte for the Autonomy deal that has cost the company $8.8 billion. Paul Kedrosky and Cory Johnson discussed the planned lawsuit by Hewlett-Packard Company (NYSE:HPQ) on Bloomberg, recently.

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“[…] Here is at the very core of this, to be fair, I suppose, to everybody involved. This goes down to the essential squishiness of the revenue recognition policies and the kinds of pressures that technology companies face ,even when they are in the acquisition pipeline or at the end of the quarter. I mean, this is so much an art and so little a science, in so much subjectivity all the way down the path,” Kedrosky said.

Johnson mentioned that a number of analysts pointed out that Hewlett-Packard Company (NYSE:HPQ)’s revenues is not what the company is making it out to be. Kerdosky stated that these types of revenue recognition problems are not new to technology companies as he has witnessed this first-hand in his earlier jobs. According to him, it wasn’t that Hewlett-Packard Company (NYSE:HPQ) didn’t look at the revenues that Autonomy was adding in its books, but the problem lied in that such practices were common in Hewlett-Packard Company (NYSE:HPQ) itself hence it didn’t took it seriously. Johnson mentioned about a recent New York Times article, in which the author mentioned that lawyers of investors who sued Hewlett-Packard Company (NYSE:HPQ) are proposing a settlement under the terms of which the company pays the lawyers their fees and the shareholders get nothing.

“This is all too common in these kinds of actions. We have seen this over and over, where the settlement disproportionately favors the litigants, the lawyers, over the actual people who brought the action […],” Kedrosky added.

As of June 30,2013, Ralph V. Whitworth‘s Relational Investors owns 27.7 million shares in Hewlett-Packard Company (NYSE:HPQ), making it one of the largest shareholders in the company.

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