HP Misses, Q4 2012 Revenue Down 7% To $30B, $6.9B Net Loss, $8.8B Write-Down For Autonomy Acquisition

HP’s earnings for Q4 ending on October 31 show a gloomy quarter. Revenue is down 7 percent to $30 billion compared to Q4 2011. But the real problem comes from GAAP net income, with a net loss of $6.9 billion, or $3.49 per share, compared to a slim net profit of $0.2 billion for Q4 2011. Non-GAAP diluted earnings per share is at $1.16 compared to $1.17 year-over-year. Most of the bad news comes from a huge $8.8B write-down for $11.1 billion Autonomy acquisition due to accounting fraud.

In its earnings document, HP cites “serious accounting improprieties, disclosure failures and outright misrepresentations.” HP CEO Meg Whitman commented during the earnings call “we feel terrible about the deal.”

According to Thomson Reuters, analysts forecasted net income of $2.2 billion on revenue of $30.4 billion. The write-down is unexpected and represents the vast majority of HP’s loss. Without it, it would be a slight miss for HP on both revenue and net income. On EPS, HP slightly beat expectations. Instead of $1.14 non-GAAP diluted EPS, HP reports $1.16.

There is still a “decline in hardware” according to HP CFO Cathie Lesjak. But the disappointment comes from Autonomy. “HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP,” she said.

HP has reported two huge write-downs for the last two quarters. The company reported the fraud to authorities. “We will now carry on and pick it from here,” Whitman said during the earnings call.

Autonomy is still HP’s largest acquisition to date. It has been referred to as a way to realign HP’s business. For next quarter, an enterprise group will be created to reflect those changes.

But it was a decision made by a previous executive team. “We are very focused on products, products, products,” Whitman said.

Here is HP CEO Meg Whitman statement about the earnings:

As we discussed during our Securities Analyst Meeting last month, fiscal 2012 was the first year in a multiyear journey to turn HP around. We’re starting to see progress in key areas, such as new product releases and customer wins. We’re particularly pleased that in Q4, we were able to improve our balance sheet, generating $4.1 billion in operating cash flow, and we returned $384 million to shareholders in the form of share repurchases and dividends.