LESSON 8: Valuing technology companies remain elusive

When it comes to valuing the company, the valuators stepped in hot soup while valuing Facebook and Autonomy, the company acquired by HP.

Before the Facebook’s IPO the social networking giant was valued at an exasperated some which obviously was a goof up since the company’s shares fell 24 percent in the first three days of open trade, a fact that has led some disgruntled investors to contemplate legal action.

If Facebook’s valuation goof up is put aside then there’s another which catches attention—HP’s acquisition of software firm Autonomy. In October 2011, HP bought the Cambridge-based company for $11.7bn. Later HP announced that it was taking an $8.8bn write-off because it had realized that Autonomy was not worth anything like its purchase price. HP claimed that $5.5bn of the write-off was explained by the discovery of "accounting irregularities".

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