Tuesday, November 20, 2012

HP's Horrible Acquisition Track Record

As I'm sure most are aware, HP announced today that it would be writing-off almost the entirety of its Autonomy acquisition, which was panned from the minute it was announced and resulted in Leo Apotheker's ousting.

In acquiring Autonomy, HP basically admitted that it set fire to about $9B.  This would be bad enough if it wasn't for the fact that this is not the first, not the second, but the third time in a year that HP has admitted that a company it spent more than a billion dollars acquiring was worth far less than it paid for it.  In 2008, HP bought Electronic Data Systems for $13.9B and wrote that down by $9.8B last quarter.  In 2010 the company bought Palm for over $1B and shortly thereafter shut the operations down.  In all the sum of these three write-downs is worth almost as much as HP's current market cap!

Worst of all, the carnage from the Mark Hurd/Leo Apotheker era still might not even be done yet.  In 2010 (while the company was being led by an interim CEO if memory serves) HP made three other multi-billion dollar acquisitions at big revenue multiples.  3COM, 3PAR and Arcsight could each be a candidate for billion dollar write-downs as well.

No comments:

Post a Comment

For compliance reasons, I don't post comments to the site, but I do like hearing from readers and am happy to answer any questions. Feel free to use the comment box to get in touch. Please leave an email address in your comment so that I can write back, or email me directly at Skrisiloff@avondaleam.com.