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  • Running Head: CASE ASSIGNMENT 1

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    This document discusses a case assignment involving HP's acquisition of Autonomy and the subsequent $8.6 billion impairment charge. The student believes HP's 8-K press release announcing the impairment was strategic to counter unrealistic expectations about Autonomy's future performance given the inflated purchase price. The high level of CEO turnover at HP likely played a role in the acquisition as the company was struggling and acquisitions are used to make competitive leaps. However, the accounting for the acquisition may have overstated Autonomy's value.

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    This document discusses a case assignment involving HP's acquisition of Autonomy and the subsequent $8.6 billion impairment charge. The student believes HP's 8-K press release announcing the impairment was strategic to counter unrealistic expectations about Autonomy's future performance given the inflated purchase price. The high level of CEO turnover at HP likely played a role in the acquisition as the company was struggling and acquisitions are used to make competitive leaps. However, the accounting for the acquisition may have overstated Autonomy's value.

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    © All Rights Reserved
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    30 views4 pages

    Running Head: CASE ASSIGNMENT 1

    Uploaded by

    Kyte
    This document discusses a case assignment involving HP's acquisition of Autonomy and the subsequent $8.6 billion impairment charge. The student believes HP's 8-K press release announcing the impairment was strategic to counter unrealistic expectations about Autonomy's future performance given the inflated purchase price. The high level of CEO turnover at HP likely played a role in the acquisition as the company was struggling and acquisitions are used to make competitive leaps. However, the accounting for the acquisition may have overstated Autonomy's value.

    Copyright:

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    Download as DOCX, PDF, TXT or read online from Scribd
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    Running head: CASE ASSIGNMENT 1

    Case Assignment

    Student’s Name:

    Institutional Affiliation:
    CASE ASSIGNMENT 2

    Case Assignment

    How Do You Feel About the 8-K Press Release Announcing the Impairment in Case

    Exhibit 6?

    I think HP's press release was a strategic move to counter unrealistic future expectations

    about Autonomy's performance. Already, HP had purchased intangible assets and goodwill

    amounting to $4.6 billion and $6.6 billion, respectively (Hopkins, 2018, p.8). However, the

    company felt that Autonomy's value had been exaggerated and accused the executives of

    cooking the books to inflate the purchase price. If HP were to stick to Autonomy's stated value,

    the shareholders would expect too much from the acquisition. However, HP executives noted

    that failures, improprieties, and misrepresentations would give a wrong picture of Autonomy's

    financial position. Consequently, HP would be blamed if Autonomy's future performance does

    not satisfy the shareholders' expectations. The press release clears the air and prepares everyone

    psychologically in case of Autonomy's poor performance in the future.

    Do You Think the Level of CEO Turnover Played a Role in the Acquisition? How About

    the Accounting for the Acquisition?

    Yes, the level of CEO turnover could have played a role in the acquisition. The

    acquisition was one way of addressing HP's poor performance, which could have been attributed

    to the high level of CEO turnover. Firms engage in acquisitions to make necessary leaps in

    already competitive markets (“Mergers and Acquisitions,” n.d.). In the current case, HP is

    already struggling with diminishing margins in the hardware business (Hopkins, 2018, p.2),

    probably due to leadership problems. Since 1999, the company has had more than four CEOs,

    most of whom are forced to resign after a few months of appointment. The current acquisition is

    strategic since HP has been performing poorly in the hardware market. Autonomy was a
    CASE ASSIGNMENT 3

    software leader, and its performance over the years was impressive. Consequently, the

    acquisition would make HP even more competitive in the local and foreign markets.
    CASE ASSIGNMENT 4

    References

    Hopkins, J. J. (2018). HP and Autonomy: Who's accountable?

    Mergers and acquisitions. (n.d.). Price Water House Coopers. Retrieved from

    https://www.google.com/url?

    sa=t&rct=j&q=&esrc=s&source=web&cd=16&cad=rja&uact=8&ved=2ahUKEwjWr__c

    tcvnAhUhA2MBHYWjCrwQFjAPegQIBRAB&url=https%3A%2F%2Fwww.pwc.nl

    %2Fnl%2Fassets%2Fdocuments%2Fpwc-mergers-

    acquisitions.pdf&usg=AOvVaw01W4O0uhz6iOrALQ1chg_p

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