Friday, November 23, 2012

Jim Chanos (CNBC): HP remains a value trap

This whole thing is a debacle and probably should have never happened. We had been short Autonomy in our European fund in 2010 and 2011, and watched in horror as it was taken out at a big premium by Hewlett-Packard. It was one of our absolute favorite shorts at the time.”

It was pretty clear if you look at Autonomy’s books over time that it was a very, very aggressive roll-up. It was buying other companies. It was writing them down before it bought them and putting all kinds of goodwill on its books, which most accounting mavens know is a real way to play earnings games if you want to.”

Chanos remains short HP, calling it a value trap
This [HP] is a company that, as you know, our thesis was they have been basically offsetting a decline in their business by making acquisitions. In this case, almost disastrous acquisitions.”

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