On Nov. 20th, Hewlett-Packard(HP) claimed that “it will take an $8.8 billion write down on the to the Autonomy deal”(Aaron Ricadela, 2012). When it come to this event, it should be analyze from one years ago. In 2011, the former HP CEO, Leo Apotheker offered 10.3 billion dollars for take-overing Autonomy, which is an British software maker. This was one of questioning decision he made as HP CEO, as same as shuting down HP touch-pad program and breaking down HP PC business. In fact, according to recent auditing report by KPMG, the Autonomy profit is not reliable as the company claimed. It used “aggressive accounting tactic” to manage their financial statement. For instance, it recognized one of payment from subscription software product called Zantaz at once rather than recognized when it is actual.
The HP stock price dropped down 46.06 dollars in NYSE, which is most lowest price in several years. When HP declared the decision, Mike Lynch, former owner of Autonomy wrote a furious letter to HP and demanded HP board “immediate explanations" for its "highly damaging allegations" (Arthus, 2012) Then, HP hit back and declared they had ready to deal any British and U.S law enforcement's. However, it is not the more critical issue for HP. They need explain to their stakeholders about why they bought a problematic company in such high price. Who should be responsible for this case? What the plan to solve this problem?
As a business student, we had learned lots of stories like this:. The ambitious new CEO forced corporation to execute his policy which can made big change to company ,either good or bad. Some of them are good; however, most of them caused the new issue and crisis. We usually named it as agency problem. In their years, we can found hundreds papers in business journals.Also, all the business school will give great attention on this problems in their class schedule. I believed all the HP high level , even middle level managers have business education background. In my view, when this manager think about business issue, they followed their instinct but not the knowledge they learned. For example, why the CEO had offered acquisition before Independent auditing firm got fully auditing reports.As we learned in this semester,even if this case had not involved fraud problem, the most M&A would failed at end. What is the reason that CEO believed he is above the average? I believed the reason is that he may be succeed by breaking from the textbook once or even more, which gave him confidence that he was above the common sense.For business practice, as a manager , we should be skepticism all the time. We must be awarded that some thing made me success not always cause same consequence. We made the right decision before.However, the reason may be that we are lucky guys instead of “smartest guys in the room”.
Reference：
Aaron Ricadela Why Hewlett-Packard's Impulse Buy Didn't Pay Off Bloomeberg Businessweek , Retreived from:
Peter Svensson, Hewlett-Packard: Company we bought lied about finances November 20, 2012 Retrieved from:
Charles Arthur &Rupert Neate, HP hits back after angry letter from Autonomy boss. The Guardian ,27 November 2012 Retrieved from:
