years under three different CEOs. In that time, HP has spent more than $40 billion to buy dozens of companies. In a reflection of how poorly the biggest of those deals have performed, HP's market value has fallen to just $23 billion. That's about 70 percent less than what HP was worth in June 2007 when the first iPhone went on sale.
In the last three months, HP has absorbed nearly $17 billion in non-cash charges to account for the diminished value of its 2008 acquisition of technology consulting service Electronic Data Systems and its 2011 purchase Autonomy. Last year, HP took a nearly $900 million hit for its purchase of device maker Palm Inc.
Other deals for computer networking gear maker 3Com ($2.7 billion deal), data storage service 3Par $2.4 billion) and software maker ArcSight ($1.5 billion) are working out better, so far.
But the Autonomy deal never seemed to make sense to anyone outside HP.
“Something smelled bad about it from the beginning,'' said 451 Research analyst Alan Pelz-Sharpe, who has been following Autonomy since the company went public in 1998.
Autonomy, which was based in Cambridge, England, had been known for a "dog-eat-dog'' sales culture that drove employees to do whatever it took to hit their quarterly targets or risk incurring the wrath of CEO Mike Lynch, Pelz-Sharpe said. “It was never a happy company,'' the analyst said. “It was always a place where people were frightened to speak out.''
Whitman fired Lynch in May because she was frustrated with Autonomy's poor results since the acquisition, which closed less than two weeks into her tenure as HP's CEO. She said she had no idea that she would uncover conduct that led her to allege Autonomy had been fabricating sales before she ousted Lynch. In a statement to the Financial Times, Lynch denied any wrongdoing at Autonomy.
By the spring of 2011, Autonomy was desperately seeking a buyer, according to Oracle Corp. CEO Larry Ellison, whose company has become a bitter HP rival. In a series of statements last year, Ellison said Lynch and investment banker Frank Quattrone tried to persuade Oracle to buy Autonomy.