HP 2013 Annual Report Download - page 35

• Our ability to conduct due diligence with respect to business combination and investment
transactions, and our ability to evaluate the results of such due diligence, is dependent upon the
veracity and completeness of statements and disclosures made or actions taken by third-parties
or their representatives.
• Our due diligence process may fail to identify significant issues with the acquired company’s
product quality, financial disclosures, accounting practices or internal control deficiencies.
• The pricing and other terms of our contracts for business combination and investment
transactions require us to make estimates and assumptions at the time we enter into these
contracts, and, during the course of our due diligence, we may not identify all of the factors
necessary to estimate accurately our costs, timing and other matters or we may incur costs if a
business combination is not consummated.
• In order to complete a business combination and investment transaction, we may issue common
stock, potentially creating dilution for existing stockholders.
• We may borrow to finance business combination and investment transactions, and the amount
and terms of any potential future acquisition-related or other borrowings, as well as other
factors, could affect our liquidity and financial condition.
• Our effective tax rate on an ongoing basis is uncertain, and business combination and investment
transactions could adversely impact our effective tax rate.
• An announced business combination and investment transaction may not close timely or at all,
which may cause our financial results to differ from expectations in a given quarter.
• Business combination and investment transactions may lead to litigation.
• If we fail to identify and successfully complete and integrate business combination and
investment transactions that further our strategic objectives, we may be required to expend
resources to develop products, services and technology internally, which may put us at a
competitive disadvantage.
We have incurred and will incur additional depreciation and amortization expense over the useful
lives of certain assets acquired in connection with business combination and investment transactions,
and, to the extent that the value of goodwill or intangible assets acquired in connection with a business
combination and investment transaction becomes impaired, we may be required to incur additional
material charges relating to the impairment of those assets. For example, in our third fiscal quarter of
2012, we recorded an $8.0 billion impairment charge relating to the goodwill associated with our
enterprise services reporting unit within our former Services segment and a $1.2 billion impairment
charge as a result of an asset impairment analysis of the ‘‘Compaq’’ trade name acquired in 2002. In
addition, in our fourth fiscal quarter of 2012, we recorded an $8.8 billion impairment charge relating to
the goodwill and intangible assets associated with Autonomy. If there are future decreases in our stock
price or significant changes in the business climate or results of operations of our reporting units, we
may incur additional charges, which may include goodwill impairment or intangible asset charges.
Integration issues are often complex, time-consuming and expensive and, without proper planning
and implementation, could significantly disrupt our business and the acquired business. The challenges
involved in integration include:
• combining product and service offerings and entering or expanding into markets in which we are
not experienced or are developing expertise;
• convincing customers and distributors that the transaction will not diminish client service
standards or business focus, persuading customers and distributors to not defer purchasing
decisions or switch to other suppliers (which could result in our incurring additional obligations
27