This Hewlett-Packard Acquisition Just Got a Lot More Expensive

Hewlett-Packard (NYSE:HPQ) may have beaten earnings expectations on Tuesday, but only by excluding a significant accounting charge related to allegations of fraud tied to its Autonomy Corp. software unit.

Alleged accounting “improprieties” at the acquired company led to a one-time accounting charge of $8.8 billion, Hewlett-Packard said. The charge is linked to the “associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term,” the company said in a statement.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

Along with the “serious accounting improprieties,” there were also “disclosure failures” and “outright misrepresentations” at Autonomy that occurred prior to its acquisition for $11.5 billion in 2011 and were discovered by a nearly seven-month-long internal investigation. The investigation was launched after a senior member of Autonomy came forward, H-P said.

After the earnings announcement, shares tumbled in pre-market trading.

Hewlett-Packard posted fiscal fourth-quarter earnings excluding items of $1.16 per share, down from $1.17 per share in the year-ago period. Revenue was down to $29.96 billion from $32.12 billion a year earlier as the company’s share of the PC market shrank.

Analysts had expected H-P to report earnings excluding items of $1.14 per share on $30.43 billion in revenue, according to Thomson Reuters.

Investing Insights: Hewlett Packard Earnings: Profit and Revenue Dip Depresses Investors.