I previously used the analogy of a train wreck in progress. Looks like the freight cars are still flying through the air.
Jonathan Weil, in his post at Bloomberg, HP’s Explanation Still Makes No Sense, says the numbers provided by HP aren’t adding up.
The allegation by HP is that
About $200 million of Autonomy’s revenue had been recorded prematurely or improperly over a two-year period beginning in 2009,
Mr. Weil points out that would be about 12% of the combined income for 2009 and 2010. From a $200M error there is an $8B writeoff, of which $5B is goodwill?
I won’t go into more detail, but wanted to put down a marker that it looks to me like there are a whole lot more questions to ask. Perhaps, just maybe, said questions need to be directed to HP and not so much to the Big 4.
Here’s a couple of articles if you want to dive deeper over the Thanksgiving weekend:
- Jonathan Weil – Bloomberg – HP’s Explanation Still Makes No Sense
- Jesse Drucker – Bloomberg – HP’s Accounting Claims Are Seen as Cover for Bad Deals
If you are really interested, those two articles will show why the numbers and explanations offered are drawing lots of questions.
One teaser: HP booked $6.9B goodwill out of a purchase price of $11B. When $0.2B of income is either accelerated or non-existent or on the wrong line, HP writes off $5B of goodwill and $3B of something else.