...HP and Autonomy: A Strategic Misfire Rob Hemsath Strayer University Contemporary Business BS508 Dr. Antoinette Bridges May 19, 2014 Abstract Hewlett Packard’s 2011 Acquisition of Autonomy Corporation proved to be disastrous for the company’s financial status and reputation. While many have cited it as a poor decision, it was poor execution and HP’s internal conflicts that created a situation that resulted in HP writing of $8.8 Billion dollars of Autonomy’s value. HP’s relationships with its employees, shareholders, and partners have been damaged. The acquisition, therefore, has proven an example of poor execution. If the purpose of a merger or acquisition is to increase the economic value of the resulting consolidated corporate enterprise, the 2011 acquisition of British software company Autonomy Corporation by Hewlett Packard failed on several levels. HP’s corporate culture was such that even the decision for the purchase was fraught with internal conflict and began on an inauspicious note. When Autonomy was folded into HP, HP’s management structure did not fully integrate the new asset into the corporate line, quickly losing any industry advantage the acquisition would have brought. In the end, HP wrote down $8.8 Billion of the value of Autonomy and is struggling to reassert it’s once dominate position in the industry. The acquisition of Autonomy, therefore, was poorly executed and caused severe damage for the future of HP. HP had seen several years of internal...
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...an USD 8 billion mistake: HP & Autonomy merger Zachary E. Fender BMGT 335-800 July 14, 2013 Introduction. Hewlett Packard (“HP”) under the executive management of former Chairman Ray Lane and former CEO Leo Apotheker, wanted to acquire a leading software company providing technology solutions in the unstructured data search & retrieval specialty. British software company, Autonomy, was identified as a good candidate and in August 2011 HP published their intent to acquire it. Apotheker was not a popular HP CEO and was criticized about his famous failure with the Palm acquisition which cost USD 1.5 billion. He persuaded HP Board of Directors to proceed with a merger and the result was a disaster: USD 8 billion write down. History of deal. HP had a string of high level executive changes that led to a hasty decision to spend a colossal amount of USD 11 billion to buy a software company that used accounting standards different from the USA. Carly Fiorina then Mike Hurd then Leo Apotheker and now Meg Whitman constituted the ever-changing CEO position. HP CEO Apotheker overruled the opinion of the HP CFO and persuaded the HP Board of Directors to proceed with the acquisition. New and current HP CEO, Meg Whitman, was on the HP Board of Directors that approved the deal and has survived the fallout. A deal was made with the Autonomy founder and CEO, Mike Lynch. Soon afterwards, problems emerged and the entire Autonomy management team departed including...
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...After carefully reviewing the letter from Executive Director William Patterson, of CtW Investment Group, addressed to Hewlett-Packard’s (HP) Lead Director and Corporate Governance Committee Chairman Rajiv Gupta, I have discovered many new items I was not previously aware of. This well thought and precisely constructed letter clearly addresses the issues and concerns felt by a majority of HP’s shareholders following the news regarding the recent $8 billion of impairment charges. If I were a stockholder of HP, I would be equally as concerned and would question the judgment of upper management and the board of directors. When an impairment charge of $8 billion comes out one must simply question the accounting that was going on behind the scenes, and ask why this came out of the blue so suddenly. In HP’s case, Ernst & Young (E&Y) have been their independent auditors since 2000. This was before Sarbanes-Oxley (SOX) was in effect. E&Y’s questionable behavior lies in the amount of non-audit related fees charged to HP. The whole point of SOX was to keep auditors independent of their clients by eliminating the connection between consulting and auditing the same client. When these two items go together, that true sense of independence is impaired. In any case, E&Y is under scrutiny because as being HP’s independent auditor and missing such a huge charge of impairment, one must investigate the accounting leading up to that point. When exaiming HP’s proxy statement...
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...1. Company Overview Information Technology (IT) giant, Hewlett-Packard (HP) is one of the most acclaimed manufacturers, incorporated in 1939, known for producing software, PCs, desktops, office supplies and technological gadgets including mobile phones and cameras. In addition to that, HP’s Enterprise Business provides business consultation, support services, servers and storage that is also responsible for setting up network links and wireless access points. Throughout its establishment, HP has grown into a hardware empire that has dominated the market, thus threatening most of its competition including IBM and Oracle. HP also offers a platform that focuses on software analytics and development into a cloud provider that customers from the business field would be interested in. The introduction of this new business strategy complements HP’s new manifesto that aims to provide a “seamless, secure, context-aware experiences for a connected world” (NQlogic, 2011). This has attracted customers ranging from private households to large corporations. However, to sustain its relationship with customers, HP has to be perpetually updated with the latest software and technology. Until recently, HP has successfully built a brand that yields its profits through sales as one of the world’s leading providers for technology services, personal computers and hardware. Over the years, the multinational company has shaped into one of the largest conglomerates reaping revenue of $57 billion in 2002...
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... Fraud are triggered by three elements; rationalization, perceived pressure, and perceived opportunities. Whether the fraud benefits the perpetrator directly, or indirectly, such as benefiting the perpetrator’s company, the three elements are always present. Rationalization- perpetrators find some sort of rationalization that makes their unethical behavior seem acceptable. Perceived Pressure- perpetrators are faced with some kind of pressure, whether it be financial pressure, or executives pressure. Perceived Opportunities- perpetrators see some sort of opportunity, such as promotion, otherwise they would not do it. INTERESTING FACTS ABOUT AUTONOMY CORPORATION, PARMALAT AND HOMESTORE.COM ACCOUNTING SCANDALS Autonomy Corporation • HP accused the former Autonomy management, which was bought by HP for £6.7bn in...
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...the fall of 2011, Hewlett-Packard (HP) acquired Autonomy, an information technology software company, for $11.1 billion. Less than a year later, several top managers and Autonomy founder Mike Lynch were let go due to corporate culture differences and poor financial results. Shortly afterwards a whistleblower revealed to HP accounting improprieties that over time have forced HP to write-off over $5 billion. HP claims that Autonomy mischaracterized its audited financial statements intentionally in order to make the company more attractive to investors and potential buyers. At the center of the scandal is the method in which Autonomy recognized revenue. Autonomy mischaracterized revenue from its hardware sales as more lucrative software revenue, while hiding some of the costs for these sales as marketing expenses rather than the appropriate account costs of goods sold. HP believes that Autonomy participated in what is known as round-trips, where companies sell each other products at high prices to each other recording a lot of profit without money ever exchanging hands. These practices inflated operating profit significantly All the while Autonomy founder Mike Lynch along with other former Autonomy executives deny all accusations of wrongdoing claiming that HP are using Autonomy has a scape goat for running the company into the ground. HP has reported the situation to both the American and British authorities and investigations are ongoing. HP is currently being sued by investors...
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...HP – STRONG BUY Equity Research • IT • 19 August 2011 • Jyske Markets Accounts This is a case recommendation. The company will be included in our equityresearch universe as long as it holds price potential justifying a BUY recommendation. When this is no longer the case, we will discontinue our coverage although our recommendation is ACCUMULATE, REDUCE or SELL. HP price fall is overdone We restate our STRONG BUY recommendation for HP and see yesterday’s dramatic price fall as an attractive opportunity to buy. This particularly applies to investors who are patient enough to wait for better market conditions/macro-economic improvement. HP lowers its outlook: as feared, HP (like Dell (STRONG BUY) earlier in the week) last night downgraded its full-year outlook. It was, however, a relatively moderate downgrade since the sales forecast was lowered by 1.6% and EPS by 3%. Whereas HP previously guided 2011 sales and EPS at USD 129bn-130bn and USD 5.0, respectively, HP now guides USD 127.2bn-127.6bn and USD 4.82-4.86, respectively. HP’s forecast is still a shade better than we had estimated (USD 127.6bn and USD 4.7). The reduced forecast reflects a sluggish willingness to buy among private business customers and that corporate customers are now more hesitant due to the rising macro-economic uncertainty. For Q4, HP guides sales at USD 31.1bn-32.5bn as well as Non-GAAP EPS of USD 1.12-1.16 compared with consensus at USD 33.9bn and USD 1.30, respectively. In addition, HP announced...
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...Lenovo Group Limited, Microsoft Corporation, Oracle Corporation, Samsung Electronics Co., Sony Corporation and many others. Main Competitors SWOT HP SWOT analysis 2013 Strengths 1. Strong presence in China 2. Brand reputation 3. Diversified product portfolio Weaknesses 1. Poor competency in acquisitions 2. 29% of income comes from personal systems division 3. Poor presence in tablet market Opportunities 1. Expand services and enterprise solutions divisions 2. Increasing demand of cloud based services 3. Acquisition of more technology related patents Threats 1. Retaliation by incumbent firms in software services 2. Slowing growth rate of the PC market 3. Rapid technological change Strengths 1. Strong presence in China. The economy of China has been growing at a steady more than 8% rate every year. The growing economy accelerates corporate spending and HP is well positioned to benefit from it. The company has increased its investments in the market and expanded product and service offerings, especially its enterprise business and services divisions. These divisions offer the most profitable HP’s products, including cloud computing services and enterprise solutions. Strategic expansion into Chinese market may result in a strong competitive advantage for the business in the near future. 2. Brand reputation. HP is the world’s leading PC vendor with more than 15% market share. It is also one of the major providers of service network products. The company has...
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...1) ‘HP Way ‘is a set of primary values that define how workforce and the company are to perform. These values have become the foundation of the “HP Way”. It is an objective-oriented philosophy, where each constituency can share the same principles and work toward a common goal. The primary values of the HP Way are trust and respect for individuals; high level of achievement and contribution; conducting business with uncompromising integrity; common objectives through teamwork; innovation and flexibility. The company’s founder put focus not only on to make creative products but also to create supportive corporate culture. The Company has many personnel policies and internal structures which support these values and each policy complement and support each other. The activities of HP employees are guided by a comprehensive system of management by objectives (MBO). The greatest advantage of MBO is that objectives are goals, not specific tasks handed out by management. Goals can be achieved in multiple ways and it is expected from employees to find their own best ways to meet these goals. Job autonomy encourages creativity in the workplace and increase the sense of accountability to employees. From the beginning HP instituted participative management style to foster teamwork, trust, openness and cooperation. Teamwork is practiced within divisions between R & D, manufacturing, marketing, and finance. Through participative decision-making HP is...
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...Ciasullo Owen Hawkins Sunday, April 15, 2012 CONTENTS Executive Summary ..................................................................................................................... 4 History ........................................................................................................................................... 5 Bill Hewlett and Dave Packard .............................................................................................. 5 Expansion .................................................................................................................................. 6 The Age of Computers ............................................................................................................ 7 Acquisitions, Innovation, and New Markets ....................................................................... 7 Struggles in Recent Years ........................................................................................................ 8 Financial Analysis ........................................................................................................................ 9 Overview ................................................................................................................................... 9 Chart 1: Stock Performance Over 5 Years............................................................................. 9 Chart 2: Basic Financial Information .....................................................................
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...Hewlett-Packard The Company Hewlett-Packard (NYSE: HPQ), also known as HP, is a global technology company working in approximately 170 countries around the world. Over the years, HP has provided service for a billion of customers and continues to service many more every day. Many people often think of printers when thinking of HP, yet they account for much more than just printers in the technology world. HP has product lines in printers, laptops, desktops, servers, storage, and networks just to name a few. With all of the products that HP has, they also provide customer service with locations around the world on six continents. HP uses the “follow-the-sun” global workflow approach, whereas when the sun moves, the opening and closing of the service centers move with the sun. For the entire year of 2011, HP’s revenue clocked in at $127.4 billion, with $12.6 billion in profit (Kessler, 2011). Even though HP made $12.6 billion in profit last year, some would consider it a slow year for the technology giant. One of the things that had an impact on profits was the acquisition of the software company “Autonomy” for over $10 billion, in October of last year. Sometimes profits do not reflect growth, and HP understands that growing will allow them to stay competitive for many years to come. Community Difference HP believes in the community and has donated to many relief funds around the world such as the Haiti earthquake and the most recent Colorado fires. With over 300 thousand...
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...Whitman using her proven talent as CEO of EBay Inc. to expose Hewlett-Packard to fresh management methodologies, systems, and approaches that differ from those used internally. (Sullivan, 2005) What happended at HP under the leadership of Leo Apotheker? Leo Apotheker was replaced after only eleven months as Hewlett-Packard’s CEO. Apotheker was the former head of European software giant SAP and was hired by Hewlett-Packard, one of the United States’ predominate hardware companies. HP’s software business made up around 2% of the company’s annual $125 billon revenue. (Goldman, 2011) Apotheker unsuccessfully tried to shift Hewlett-Packard’s culture from a hardware company to a more profitable software business. He knew and was successful in the software business and couldn’t make the transition to HP’s business plan. He made poor leadership choice and was stubborn about acquisitions, like Palm and Autonomy. By the end of tenure he wanted to take HP out of the hardware business altogether, an area of the market that HP led both in the United States and globally. (Goldman, 2011) Apotheker’s poor execution of his vision and lack of communication to investors drove HP stock shares down more than 40% in less than a year. He not only failed at conveying his vision for HP, but he couldn’t make the marriage of software and hardware work....
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...TIM 685 STRATEGIC PLANNING COMPANY AUDIT HEWLETT PACKARD Contents Abstract 3 HP Background 3 Company Mission 4 HP’s Corporate Objectives 5 Mission and governance Analysis 5 Recommendations 6 HR Report on HP 7 Recommendation 8 Internal Analysis 8 Recommendation 8 Mergers Acquisitions and Spin-offs 9 Recommendation 9 External and Global Environment 9 External Analysis 10 Recommendation 11 Porter five forces Analysis of HP 12 Recommendation 14 SWOT Analysis 14 Conclusion / Recommendation 15 Reference: 16 Abstract This Company audit was conduct using publicly available information about Hewlett-Packard. The Audit includes mission statement, company philosophy, PEST SWOT, Financial Analysis, market position analysis, corporate governance analysis. The analysis uses industry standards for company audits such as, Porter, SWOT, and PEST as a guideline for the areas to be assessed. HP Background Hewlett Packard is a publicly traded company on the New York Stock Exchange. The firm was started by Bill Hewlett and David Packard. The merger with Compaq was one of HP’s major strategic moves recently. Even in naming the new company the two founders flipped a coin in the famous garage, Dave Packard won the coin toss but conceded to pit Hewlett name at the front. "It is...
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...investment of US$ 538. It has since then grown into one of the largest IT companies in the world. HP incorporated on August 18, 1947, and went public on November 6, 1957. The company originally worked on a wide range of electronic products for industry and even agriculture. From the 1940s until well into the 1990s the company concentrated on making electronic test equipment, wave analyzers, and many other instruments. A distinguishing feature was pushing the limits of measurement range and accuracy; many HP instruments were more sensitive, accurate, and precise than other comparable equipment. HP is recognized as the symbolic founder of the Silicon Valley. HP entered the computer market in 1966 with the HP 2100/ HP 1000 series of minicomputers and is basically the first company to mass produce a personal computer. In the early 1980’ies HP enters into the printer/ scanner production which since then has remained being one of the most important businesses for HP. In the 1990s, HP expanded their computer product line, which initially had been targeted at university, research, and business users, to reach consumers and grows through acquisitions in the computer sector, buying Apollo Computer in 1989 and Convex Computer in 1995. Under CEO Lew Platt (1999), all of the businesses not related to computers, storage, and imaging were spun off from HP. Thus releasing the very core of what HP was...
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...services 8 Brand name 9 Product manufacturing 9 Weaknesses 9 Acquisitions 9 Supply Chain Dependencies 10 Flat R&D spending and less patents 10 Financial Performance 11 HP vs. Industry 12 Non-Financial Performance 13 Opportunities 13 Cloud Computing 14 Emerging Markets 14 Supply Chain Improvements 15 Threats 15 Rivals 15 Smartphones 16 Economic Slowdown 16 Current Strategy 17 Business Level Strategy 17 Corporate Level Strategy 19 Recommendation 20 Risks 22 Implementation 24 Appendices 26 Appendix A: HP Company Mission Statement 26 Appendix B: Worldwide Portable PC Shipments (2011-2012) 27 Appendix C: Worldwide Desktop PC Shipments (2011-2012) 28 Appendix D: Worldwide Tablet Computer Shipments (2011) 29 Appendix E: SWOT Analysis 30 Appendix F: The Pathfinder Model 31 Works Cited 32 Company Profile Hewlett-Packard first began its modest operation in 1939, when its founders Bill Hewlett and Dave Packard began making its first product, the audio oscillator. In the early years, the company often faced a lack of focus on its products and created everything from electronic products to agricultural products. In 1980, HP manufactured its first PC. From there, Hewlett-Packard (HP) grew to be the world’s leading PC manufacturer. (HP Interactive Timeline) The company is headquartered in Palo Alto, California, but bases its U.S. operations in Houston, Texas. HP conducts business in over...
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