From the course: Accounting Foundations: Asset Impairment
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Case study in goodwill impairment: HP and Autonomy
From the course: Accounting Foundations: Asset Impairment
Case study in goodwill impairment: HP and Autonomy
- A goodwill impairment loss can have a huge impact on a company's reported profits and can signal its strategic plans, marketing initiatives, and hope for synergies just aren't working. As an example, let's look at the acquisition of Autonomy by Hewlett Packard, or HP. HP is a hardware and software company based in Palo Alto, California. In October, 2011, HP purchased Autonomy, an enterprise software company founded in Cambridge, England. The purchase price, $11 billion. Just over one year later, in November, 2012, HP announced that it was reporting a $9 billion impairment loss related to the Autonomy acquisition. This means that HP had determined that the value of Autonomy wasn't $11 billion, it was just $2 billion. Now, this case is still in the courts. HP has accused Autonomy of manipulating the reporting of its sales to boost the apparent value of the company in advance of the acquisition. Autonomy, on the other hand,…
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