“I understand why they did a write off, I understand why they wanted to get it into that [accounting] year, but the reality of the situation is that we and, I understand, Deloitte are very comfortable with it.” Mr Lynch added that he “absolutely rejects” the claims being made by HP, but appeared relaxed and was able to muster some humour despite the cloud hanging over his reputation. “From our point of view it’s just wait and see what they’ve got to say....but I can tell you one thing, Meg is not on my Christmas card list this year,” he joked.
“We haven’t heard anything from anybody,” Lynch said in an interview with Bloomberg News at a conference in London today. “It’s a very strange way of doing things, but we’d love to hear more.”
Given what it now believes about Autonomy’s profitability and growth, HP is effectively saying it would have paid a little more than half the sticker price for the Cambridge-based company. The writedown outstrips the deal’s $4.6 billion premium over Autonomy’s market value at announcement. Autonomy doesn’t have much in the way of hard assets or outstanding invoices, so the charge can’t relate to a sudden revaluation of kit or the failure of existing customers to pay their bills. The last balance sheet shows just $43 million of plant and equipment, and “accounts receivable” – customer debts – of $330 million: 0.4 percent and 3 percent of the purchase price respectively. Even if, say, half of accounts receivable proved suspect, that would only make up 3 percent of the mega writedown. So the charge must reflect a reassessment by HP of the future cash flows it will obtain from the business. HP now thinks these are worth a lot less than it thought: smaller and growing less quickly.
FM: "The argument pushed by some columnists, and the bank itself, is that 'all’s well that ends well' and the end justifies the means. Deutsche Bank survived without a German bailout and that’s a good thing. The global financial system was saved and investor confidence was maintained. Let’s 'den Mist hinter sich bringen'."
Weatherford Seen Target After Accounting Lapses
Weatherford International Ltd. (WFT) is shaping up to be a takeover target with accounting issues that wiped out half its market value on the verge of being resolved. The world’s fourth-largest oilfield services company has slumped 53 percent since March 2011, when it disclosed income- tax errors and weaknesses in its internal controls. The decline left Geneva-based Weatherford valued last week at 5.1 times its estimated 2013 earnings before interest, taxes, depreciation and amortization, a cheaper multiple than 90 percent of similar- sized peers in the oil and gas services industry, according to data compiled by Bloomberg.
High Earners at Fannie, Freddie Draw Scrutiny
An inspector general's report is bringing renewed scrutiny to the pay levels of hundreds of senior managers at Fannie Mae FNMA 0.00% and Freddie Mac FMCC +1.00% who earned more than $200,000 last year, a time when Congress threatened to sharply cut the pay of rank-and-file employees by putting the firms on federal wage scales. The report from the inspector general for the Federal Housing Finance Agency, slated for release on Monday, looked at the 2011 take-home pay for some 2,000 senior but nonexecutive employees. While executive pay at Fannie and Freddie has received close examination, figures for the next-highest earners haven't previously been disclosed. The report found that 333 employees at the "vice president" level had median pay of $388,000, meaning half were paid more and half were paid less. Some 1,650 employees at the "director" level had median pay of $205,300. Those 2,000 employees account for roughly one-sixth of the workforce.
via Felix Salmon
Peter Schiff's Dec. 7 op-ed, "The Fantasy of a 91% Top Income Tax Rate," included some faulty data due to a misreading of IRS tax tables. In 1958, an 81% marginal tax rate applied to income of $140,000 and the 91% rate at $400,000 for married couples, which would correspond to income levels about eight times higher today. The article misstated the income thresholds and the comparison to income today. In the same year, roughly 10,000 of the nation's 45.6 million tax filers had income subject to a rate of 81% or higher. The number is an estimate and is inexact because the IRS tables list the number of tax filers by income ranges, not precisely by the number who paid at the 81% rate. The original article said the number of such filers was 236.
Massachusetts accountant submits handwritten Hostess bid [NYP]
A 59-year-old Massachusetts accountant has submitted a “bid” for the maker of Twinkies, Ho Hos and Wonder Bread — offering to buy the operation in a letter written to CEO Gregory Rayburn and the judge who will oversee the bankruptcy auction. “I’ve been looking for a business to buy for a long time but do not have the capital,” Donald Sheridan, of Wellesley, Mass., told The Post yesterday. [...] “I’ve come to the conclusion that bankruptcy proceedings have become nothing more than a means to employ stupid lawyers and stupid judges instead of being the means to teach stupid people hard lessons in stupid management,” Sheridan wrote.
Police: Man stabbed by Westmoreland Co. woman for taking last beer [WPXI]
Vanessa Robinson is facing charges after investigators said she stabbed James Gallone when tried leaving her Hempfield Township apartment last Thursday. Police said Robinson attacked him because she was angry that he took the Colt 45 beer from her home. Gallone was treated for non-life-threatening injuries.