Costly Misstep? Hewlett Packard Claims $4B Losses From Autonomy Deal: Report
Portfolio Pulse from Lekha Gupta
Hewlett Packard Enterprise Co (NYSE:HPE) reported over $4 billion in losses from its acquisition of British software firm Autonomy, attributing the loss to fraud by Autonomy's co-founder Mike Lynch. HP is seeking to recoup losses through a lawsuit against Lynch and Autonomy's former CFO, Sushovan Hussain. Despite the substantial loss, HP's strategic rationale for the acquisition was partly due to Autonomy's unique technology. HP acquired Autonomy for $11.1 billion in 2011 and wrote down its value by $8.8 billion within a year. Following a lengthy civil trial, HP substantially won its case in 2022, though damages are expected to be less than the $5 billion claimed.
February 12, 2024 | 5:04 pm
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Hewlett Packard Enterprise Co faces over $4 billion in losses from its acquisition of Autonomy, attributed to fraud. HP is in legal proceedings to recoup losses, with shares trading higher by 1.10% at $15.65.
The news about the losses from the Autonomy deal and the ongoing legal battle to recoup those losses could have mixed impacts on HPE's stock price. On one hand, the revelation of a $4 billion loss due to fraud is negative. However, the fact that HPE's shares are trading higher suggests that investors might be focusing on the potential recovery of losses through legal means or may have already priced in the impact of the Autonomy deal. The strategic rationale behind the acquisition, despite the loss, also adds a layer of complexity to the stock's short-term outlook.
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