The revelation Tuesday that Hewlett-Packard (HPQ) is writing down $8.8 billion related to its acquisition of British software company Autonomy isn't the first time HP has gotten into trouble after buying another company.
In recent years, the company has written down billions of dollars on other acquisitions that made headlines when they were announced, only to gradually turn sour.
The company has made more than $32 billion in acquisitions since 2008, but had a value of $23 billion Tuesday.
"The amount of destruction of value that company has experienced is astonishing," said Brian Marshall, an analyst with the ISI Group. ISI downgraded HP from "buy" to "neutral" Tuesday.
The major deals gone bad were done under different chief executives and in some cases fell to subsequent CEOs to manage -- which may hint at the difficulties of running a company smoothly with a revolving door for leadership.
Marshall said HP's problems have resulted in "poor choices of companies and poor integration."
Before the recent run of deals, HP completed its biggest deal of all in 2002 under then-CEO Carly Fiorina. After a bitter proxy battle, HP pulled off a merger with Texas-based Compaq for $19 billion.
The deal was ultimately viewed as a success, but this year HP wrote off $1.2 billion associated with it as the global personal computer market slowed.
In 2008, HP acquired Texas-based Electronic Data Systems for $13.9 billion to beef up HP's technology consulting services. "We think this thing has got tremendous opportunities," then-CEO Mark Hurd told Wall Street analysts. "We have got work to do, but we feel like we can have a pretty damn attractive business here."
In July this year, HP wrote off $8 billion of that acquisition.
In 2010, HP bought smartphone-maker Palm for $1.2 billion, largely to acquire Palm's webOS operating system. But webOS never worked out for the company. In fall 2011, HP wrote off $885 million associated with the purchase.
Neil MacDonald, a fellow with the Gartner research firm, cautioned against making too much of HP's troubled acquisitions, saying other companies it has purchased have proven to be better investments. He cited Vertica, 3Par and ArcSight, saying "these acquisitions have done very well."
In addition, the 2009 purchase of Massachusetts-based 3Com for $2.7 billion, and the 2006 acquisition of Mercury Interactive for about $4.5 billion in stock appear to have worked out.
While no merger is free of problems, the fate of some of HP's biggest deals raises questions about its acquisition process, analysts said.
"Every merger is going to have issues," said Rob Enderle of the Enderle Group in San Jose. With EDS, the company bought a services company, much of whose value lay in its employees, and then began laying them off, he said. "You can't cut a services company without losing its potential. It's all about the people."
Palm was a good company purchased under Hurd and "screwed up" under CEO Léo Apotheker, Enderle said. "It was a software guy doing a hardware acquisition. So much went wrong."
Cindy Shaw, an analyst with Discern, said the Autonomy write-down "highlights the company's poor track record in making successful acquisitions" and overpaying for them.
The "silver lining" in HP's weak balance sheet, she said, is that it doesn't leave any room for further merger and acquisitions bloopers.
Contact Pete Carey at 408-920-5419; follow him on Twitter.com/petecarey.
HP's major acquisitions were sometimes followed by major write-downs, but none rivaling Tuesday's shocking revelations about British software maker Autonomy:
July 2006: HP announces a deal to acquire Mountain View software maker Mercury Interactive for about $4.5 billion in stock. No reported problems.
May 2008: HP announces plans to buy Texas-based Electronic Data Systems for about $14 billion to bolster HP's technology consulting services. Writes down $8 billion in 2012.
November 2009: HP buys 3Com for $2.7 billion in a deal to expand its networking business. The deal seems to be working.
April 28, 2010: HP announces it will buy mobile-phone maker Palm for $1.2 billion. Writes down $885 million in 2011.
September 2010: 3Par acquired for $2.35 billion. Analysts give this deal good marks.
October 2010: ArcSight acquired for $1.5 billion. Also favorably viewed.
February 2011: Vertica acquired for a reported $350 million. Favorably viewed.
September 2011: HP buys Autonomy for approximately $11 billion. Writes down $8.8 billion Tuesday.
July 2012: As global PC market slows, HP writes down $1.2 billion from $19 billion merger with Compaq in May 2002.