Hp Case

1137 Words Feb 14th, 2013 5 Pages
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
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The company acquired this time is Autonomy. Being purchased for the large price of $10 billion, HP now is recognizing $8.8 billion to be impaired. This charge was a contributing factor to a $6.9 billion quarterly loss HP has reported. This time around, HP has announced that they have uncovered fraud that took place at Autonomy prior to their acquisition. Former CEO of Autonomy, Mike Lynch, has argued in defense of Autonomy, on the grounds that differences lie in the accounting methods used in the U.K. vs. the U.S. He further states that HP was fully aware of these differences Autonomy disclosed to them in the process of acquisition. The impact currently effecting HP is that their stock price is now down 64% over the last two years in relation to these series of missteps.

Through this review process of reading Mr. Patterson’s letter as well as the articles supporting his facts, I have gained a lot of knowledge on this current business event. Not only does this event consist of potential accounting errors, but also that of mismanagement of valuable capital resources from the top down (including board of director actions). The articles and SEC filings that I accessed were very helpful in gaining this knowledge, however they were also quite technical. Some areas that I did not understand were as follows: * In the New York Times article by Quentin Hardy, I did not understand what was meant by saying that HP’s market capitalization was left at

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