HP acquisition of Autonomy and a $8.8billion write off

On 20 Nov 2012 Hewlett Packard (HP) announced that it was taking a write off of $8.8 billion of the $11.1 billion that it paid to acquire Autonomy in  October 2010. At the time Automony was a member of the FTSE 100 and seen as a UK technology success story.

There has been lots in the UK financial press since then as HP’s key argument is that they overpaid for Autonomy because of accounting manipulation. This is strongly denied by Automony founder Mike Lynch.

News stories:

• Hewlett-Packard accountants sued over Autonomy purchase (BBC 29 Nov 2012)
• US to probe Autonomy sale to Hewlett-Packard (BBC 27 Dec 2012)
• Autonomy’s Lynch defends record as HP confirms Federal probe (Reuters 28 Dec 2012)

Breaking down a 8.8$ million write off – from Musings on Markets blog (click to expand)

Aswath Damodaran’s Musings on Markets blog makes a strong case that even if HP is right this only accounts for $2.45 billion of the $8.8 billion write off – see HP’s Deal from Hell: The mark-it-up and write-it-down two-step.

The write off raises issues about the acquisition in terms of corporate strategy, leadership, corporate governance as well as the accuracy of Autonomy’s accounts.

Resources for more information:

Thomson One Banker - a deals module search will provide details of the deal: announced 18 Aug 2011, effective 3 Oct 2011, “UK – Hewlett-Packard Vision BV of the Netherlands, a unit of by Hewlett-Packard Co (HP),  completed the tender offer to acquire the entire share capital of Autonomy Corp PLC (Autonomy), a
Cambridge-based developer of infrastructure and information management software, for GBP 25.5 (USD 42.09)” [SDC deal number 2337968040]

Thomson Research - analysts reports - For example, on 23 Aug 2011 Marc Geall of Deutsche Bank published a report on Autonomy Corp plc. This reported a change of recommendation to sell, since the shares were GDP 24.86 almost fully valuing the HP offer, and substantially higher that Deutsche Bank’s fundamental target price of GBP 17.50.

Business Source Premier (EBSCO): - several trade journals with articles on the HP aquisition of Autonomy. For example,

Forbes.com (2012) ‘With Autonomy, H-P Bought An Old-Fashioned Accounting Scandal. Here’s How It Worked’ Forbes.Com, (November 20, 2012):p. 39, Business Source Premier, EBSCOhost, viewed 11 January 2013.

Manchester Business Answers 24/7 FAQ:

Where do I find info on Mergers and Acquisitions? and

mergers_and_aquistions tag.

Researching a UK company – reports and data

What resources are available for researching FirstGroup plc? (who among other things run many of the buses in north Manchester)

Free online resources:

• FirstGroup PLC company website – especially the investor relations section that gives the latest annual report (128 pages).
• Yahoo Finance UK, Google Finance UK,

Library subscribed resources:

• Marketline Company Profile FirstGroup plc from Business Source Premier – 24 pages including key facts, business description, history, key employees, revenue analysis, SWOT analysis
• GlobalData FirstGroup plc (FGP) – Financial and Strategic SWOT Analysis Review July 2012 – an analyst report from Thomson Research – 26 pages – About the company, Company Analysis (including SWOT), Company Financial Ratios, and details of GlobalData and their analysis methodology.
• Key Note Bus & Coach Operators Market Report 2012 from KeyNote – a market research report including a profile of FirstGroup as a key company. (Other KeyNote market reports include Rail Travel 2011 and KeyNote company information provides five years of company accounts.)
• 7 Economist articles (since 2001) and over 500 Financial Times articles – both from ABI/Inform (Proquest) .
• 10 years of FirstGroup accounts through Fame – a database based on accounts filed at UK Companies House with additional information on shareholders and subsidiaries.

In summary, the library subscribed resources provide access to reports that would be expensive to buy (investment analysts and market research reports) and databases that provide more flexible search and download facilities than free online resources.

If the above library resources are not enough, there are plenty more:

• Thomson Research has a total of 256 analyst reports on FirstGroup plc published in the last 2 years. These are valuable reports and not easily found with a google search – see Analysts reports on Thomson Research.
• Factiva has 2,176 news stories from the last 6 months – including over 100 from the Financial Times.
  Dow Jones Company Report FirstGroup plc – from Factiva – 15 pages – company overview and financials (balance sheet, cash flow and income statement) for last 5 years.
• Thomson One Banker provides financial market information: overview, prices, financials, estimates, deals (e.g mergers and acquisitions), ownership and comparables.
• ORBIS is similar to Fame except that it covers the largest 230,000 companies worldwide (Fame is UK and Ireland only) so you can compare FirstGroup with similar companies worldwide.
• Bloomberg Professional provides financial market information and  business news – the DES (description) function provides a brief overview report.

This post applies advice from previous posts to a specific company: How to Research UK Company Data, Company Financial Analysis (Global Companies), and How to Research Global Company Data.

Mergers and Acquisitions Research

Factiva – BAE Systems and FT (click to expand)

The possible merger of BAE Systems and EADS is much reported in the financial press at the moment.

Using the Factiva business news database we can see that there have been almost 100 articles about BAE Systems in the Financial Times alone in the last 3 months (almost all about the proposed merger).

However, there is not yet anything definite. On 12 Sept 2010 BAE Systems issued an official statement.  ”Further to the recent movement in BAE Systems’ share price, BAE Systems plc (BAE Systems) and EADS N.V. (EADS) confirm that they are in discussions regarding a possible combination of their businesses. …” (RNS Number 1353M from PI Navigator). There is no specific merger proposal, so there is very little detail that can be recorded in a Merger and Acquisition database.

Thomson Research – Analysts’ reports for BAE Systems (click to expand)

Although the merger is only possible. It is likely to be included in reports be Analysts who follow either of these companies. (Some analysts may delay producing a report until there is a specific merger proposal.)

For more details on Thomson Research see the earlier post Analysts’ Reports on Thomson Research. (Remember Thomson Research only works with IE (internet Explorer)

See also (earlier posts)

• Mergers and acquisitions databases (Nov 2011)
• Researching mergers and acquisitions (Jan 2011)
• Deals info from Thomson One Banker (Mar 2011)

Mergers and acquisition research can involve much more that the financial details of the deals, and remember not all deals are successfully completed.

Update 10 October 2012: EADS and BAE call off merger

• “BAE Systems and EADS announce that they have decided to terminate their discussions” (RNS Number 13955O from PI Navigator).
• EADS, BAE call off world’s biggest arms merger (Thomson Reuters)
• EADS-BAE Pull Plug on Merger Amid Government Opposition (Bloomberg)

Facebook IPO

Today is the Facebook IPO (Initial Public Offering) on the US NASDAQ exchange. Facebook has gone from being a private to a public company offering 421.23 Million shares at $38.00 each.

Information available on Bloomberg includes:

• FB US Equity – Bloomberg Ticker, US30303M1027 – ISIN, 30303M102 – CUSIP, B7TL820 US – SEDOL1, company identifiers from DES (Description)
• GIP (Tick Price Chart) – intra day price chart (at time of writing high $45.00, low $38.00, and average $39.93)
• SEC Form S-1 (Registration Statement) filed 1 Feb 2012 and other filings with the SEC (regulator) – Bloomberg function CF (Company Filings)
• Analysts research (BRC) and estimates (EE)
• and lots and lots of news on Facebook and its IPO

The Bloomberg IPO function shows that Facebook as by far the largest IPO this year.

If you want details of Mark Zuckerberg’s Facebook shares you need to look at the class-B shares – use Bloomberg’s MSH (Multiple Share Holdings) function.

Thomson Research has 11 analysts reports on Facebook. (See Thompson Research Tips )

Thomson One Banker has details of the Facebook IPO in its deals module (see Deals information from Thomson One Banker ) and financials and financial market info in its company analysis module. [FB-O -TOB Ticker, C901820175- TOB key, 30303M102 - CUSIP, B7TL820 - SEDOL]

For  informed comment on the valuation of Facebook see Facebook and “Field of Dreams”: Hoodies, Hubris and Hoopla from Aswath Damodaran’s Musings on Markets blog.

Related FAQs on Manchester Business Answers 24/7:

• Where can I find information on IPOs?
• Where can I find IPO prospectuses?

Analysts’ reports on Thomson Research

Analysts’ reports (brokers’ reports) are written by respected analysts within investment banks, brokerage houses and consulting firms worldwide for their clients.

Current University of Manchester staff and students have access to an extensive analysts’ reports collection through Thomson Research (the collection was previously called Investext).

Thomson Research company lookup (click to expand)

Analysts write their reports for clients who are mostly interested in companies as an investment opportunity so they cover public (quoted) companies and there will be more reports for larger companies. Reports vary from short buy/hold/sell recommendations to longer detailed analysis of company strategies.

For further information on Thomson Research:

• Industry Information from Thomson Research
• Thomson Research tips
• Thomson Research only works with IE
• all Thomson Research posts
• Thomson Research guide (Nov 2012) from library database guides

For FAQ answer on analysts’ reports:

How do I find analyst reports (investment bank reports)?

This also mentions how to get analysts’ reports on Bloomberg.

Thomson Research tips

Researching a public (quoted) company – whether for a research project or a job interview – you should look at Thomson Research.

Thomson Research is an excellent resource for analysts’ research reports, overview reports and company filings (e.g. annual reports).

When you login using the special database username and password you should get a screen with 4 tabs (Overview, Documents, Research and Tools).

Thomson Research (IE browser)

The Overview tab will give you summary reports for a company and its latest filings.

The Research tab gives access to analysts’ reports - often financial brokers/analysts who follow a company produce a report on a regular basis. (The analysts’ reports collection in Thomson Research was previously branded Investext).

Tips:

1) Thomsom Research requires care when looking for a company by name. For example, “Tate & Lyle” or just “Tate &” will be ok, but “Tate”, “Tate Lyle” or “Tate and Lyle” will all give you no matches. Example video screencast – http://screencast.com/t/tTsfonbej

2) Thomson Research only works with the Internet Explorer (IE) browser. You will not get an error message if you try to use Firefox, Chrome, Safari … just blank pages or sections of pages. Recently we have observed a small problem with IE version 7 – the drop down list for “Report Date” sometimes does not work so you are stuck with the default of “Last 2 Years”. (see also Thomson Research only fully works with IE  )

3) Get our database guide on Thomson Research from the How to research guides page, and browse other posts tagged Thomson Research.

Referencing

Analysts reports do not fall neatly into a standard format for referencing. Who is playing the role of publisher? The company the authors work for, since they will have given the report to their clients, or Thomson Reuters, since the report came from their investment report collection. Make sure that your reference has enough detail that readers can see where it came from and confirm if they had retrieved the identical report. For example:

Meltz, M. A., Lewis, D. & Lovell, N. (2009). [J.P. Morgan report on] The McGraw-Hill Companies – 07 Dec 2009. Thomson Research Investment Research Collection Rpt. 15613728  [Online]. Available from: Thomson Research – http://research.thomsonib.com/ [Accessed 05 Jan. 2010].

Company Financial Analysis (Global Companies)

The library has a number of useful resources for the financial analysis of public companies (companies quoted on a stock exchange).

Company Accounts

Thomson Reuters’ Worldscope database provides historical accounting data – balance sheet, income statement and cash flow statement. It is available through Thomson One Banker and Datastream. Bloomberg also has accounting data – command FA (Financial Analysis).

Thomson One Banker, Datastream and Bloomberg can also provide data on a company’s financial market performance – e.g. historical shares prices and returns, and corresponding data for market indices.

Company Filings (including Annual Reports)

Company Filings are available on PI Navigator,  Thomson Research, and Bloomberg. (Recent company reports are usually available direct from the company website.)

Analysts Reports

Analyst/Broker reports are available from Thomson Research and Bloomberg (command BRC).

Company News

Factiva from Dow Jones is a extensive online news database covering a wide range of sources. (See How Business News can enhance you research for more details.) Bloomberg also provides a wide range of company, financial market and economic news.

Related FAQ questions:

• Where can I find company financials, e.g., balance sheets etc.?
• Where can I find current and historical company annual reports?
• How do I find analyst reports (investment bank reports)?
• Where do I find current news about a company?
• How do I compare a company to its industry?

For further tips: use tags below to find other posts on these databases, and look at  the How to research … guides,

IPOs (Initial Public Offerings) – prospectuses

Thomson One Banker (Deals module) is a good way of getting a list of IPO deals but it often does not give access to the IPO prospectus. For an individual company this can be obtained from Thomson One Banker (Company Analysis) or Thomson Research – under Filings since the IPO prospectus is one of the documements that companies have to file with the regulators.

PI Navigator provides a search interface that can be used to search for all deals on an exchange within a chosen time period.

PI Navigator - IPO prospectus search - click to enlarge

Related FAQ answers:

• Where can I find IPO prospectuses?
• Where can I find information on IPOs?

Note the companies do not always choose to float on their local exchange. If in Thomson One Banker Deals you search for IPOs of UK companies then the results will include IPOs on the Nasdaq and other exchanges as well as London (Main market and AIM).

Industry information from Thomson Research

Thomson Research is best known as a source of analysts’ reports on quoted companies and of company annual reports (and other company filings). It also has a wealth of industry reports including Datamonitor Industry Profiles.

From Manchester Business Answers 24/7:

• Where do I find industry statistics and reports?

If you use the Industry criteria in a Thomson Research search you will only get industry reports. This is not a technique that you can use to look for reports on all companies in a specific industry.

Note: Thomson Research requires a special username and password and only works with Internet Explorer. See previous blog post

• Thomson Research only works fully with IE

For industry information also consider Markets and sectors databases.

How to Research Global Company Data

 

We have a wide range of information available to you connected to the Research of Global Company data focusing on areas such as:

• Company Financials: Examine up to ten years worth of Financial Data. For example, analyse the share price growth of Toyota Motor over the last decade. Research over 60,000 Public International quoted Companies.

Access:  Thomson One Banker  

• Target Sector Listings: Track a comapny’s performance against their key competitors. Research the top 230,000 international public/private companies across 200 countries.

Access: Orbis 

• Investment Analysis: Gain an insider’s view from leading International Investment banks. For eaxmple, discover how Credit Suisse, Merrill Lynch and Morgan Stanley rate China’s leading Petroleum provider. View analysis reports for over 60,000 companies.

Access: Thomson Research

• Market Analysis:  Develop an understanding of International Markets.

  Monitor global companies in the daily news and view data feeds from the world’s stock exchanges. Create a graph or chart based display of,  for example, Exon Mobil’s revenue growth.

Access: Datastream, Bloomberg

• Company/Industry News: Monitor company or industry developments from leading global news sources. Up to twenty years of daily updated news is available. For example examinehow the World’s press reacted to the latest Samsung Electronics trading figures statement. 

Access: Factiva

Please see our brand new How to Research Global Company Data guide and related FAQs from Manchester Business Answers 24/7 for further information.