PC and printer maker Hewlett-Packard Company (
HPQ
) on Tuesday reported fiscal fourth quarter earnings results that
included an unwelcome surprise: accounting fraud at Autonomy, the
enterprise software maker H-P acquired back in 2011.
The Palo Alto, CA-based company reported a fiscal fourth quarter
net loss of $6.85 billion, or -$3.49 per share, compared with a
worse loss of $8.86 billion, or -$4.49 per share, in the year-ago
period. Excluding special items, adjusted profit was $1.16 per
share.
Revenue fell 7% from last year to $30 billion.
On average, Wall Street analysts expected a smaller adjusted
profit of $1.14 per share, albeit on higher revenue of $30.44
billion.
The real story coming out of H-P's report was news of accounting
irregularities at its Autonomy software division. The company
acquired Autonomy back in 2011 in one of then-CEO Mark Hurd's final
moves with the firm. H-P commented, "HP recorded a non-cash charge
for the impairment of goodwill and intangible assets within its
Software segment of approximately $8.8 billion in the fourth
quarter of its 2012 fiscal year. The majority of this impairment
charge is linked to serious accounting improprieties, disclosure
failures and outright misrepresentations at Autonomy Corporation
plc that occurred prior to HP's acquisition of Autonomy and the
associated impact of those improprieties, failures and
misrepresentations on the expected future financial performance of
the Autonomy business over the long-term. The balance of the
impairment charge is linked to the recent trading value of HP
stock. There will be no cash impact associated with the impairment
charge."
Hewlett-Packard shares fell $1.30, or -10%, in premarket trading
Tuesday.
The Bottom Line
Shares of Hewlett-Packard (
HPQ
) have a 3.98% dividend yield, based on last night's closing stock
price of $13.30. The stock has technical support in the
$10.00-$11.50 price area. If the shares can firm up, we see
overhead resistance around the $15-$17 price levels.
Hewlett-Packard Company (
HPQ
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 2.8 out of 5 stars.
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, as well as a detailed explanation of
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.