HP mulls asset sales in aftermath of Autonomy debacle

Justice Department joins probe into HP's allegations of irregulatories at Autonomy

HP (NYSE: HPQ) is considering selling off assets and businesses to help it climb out of the financial hole exacerbated by problems at its recently acquired big data analytics firm Autonomy.

HP admitted it may have to sell the businesses "at a price or on terms that are less desirable than we had anticipated," according to the company's annual 10-K regulatory filing with the Securities and Exchange Commission (SEC).

The company did not disclose the units it is considering selling, although there has been discussion of HP selling its PC business. CEO Meg Whitman's predecessor, Leo Apotheker, proposed selling off the PC unit and focusing on software and services. Whitman, however, has reaffirmed her intention of keeping the PC business, perhaps merging it with the company's printer business.

HP's financial troubles are well-known and led to Apotheker's departure from the company last year. Before he left, however, he arranged the $11 billion purchase of big data analytics firm Autonomy. That purchase has been an albatross around the neck of Whitman.

In its 2012 third quarter financial results, HP said it was taking an $8.8 billion "noncash impairment charge" related to its acquisition of Autonomy earlier in the year. The charge forced HP to report a staggering $6.9 billion net loss for the quarter.

HP accused Autonomy's management, particularly the firm's founder Mike Lynch, of using "accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy's acquisition by HP."

In its 10-K filing, HP said the Department of Justice (DoJ) is investigating HP allegations that Autonomy management cooked the books to inflate its financial performance prior to being acquired by the IT behemoth. The DoJ joins the SEC and the UK Serious Fraud Office in investing HP's charges.

Lynch has disputed HP's allegations, saying Autonomy's financial troubles were the result of mismanagement by HP after the acquisition.

"Simply put these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them," Lynch said in a statement quoted by Reuters.

"We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained in accordance with applicable regulations, fully audited by Deloitte and available to HP during the due diligence process," he added.

The controversy has not helped HP's stock price, which declined 46 percent last year. However, HP's stock this week has benefited from the overall stock bump that followed the passage of U.S. legislation to avoid the "fiscal cliff," jumping from $13.70 at the close of trading on Monday to $15.00 at close of trading Wednesday.

For more:
- check out HP's 10-K filing
- see Reuters story

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