The most infamous example -- and the largest write-off of a merger in corporate history -- was AOL Time Warner's (Fortune 500) $100 billion write-off in 2002. AOL purchased CNNMoney and Fortune's parent company in 2001 for $106 billion. The combo quickly went south: The company wrote down $54 billion in the first quarter of 2002 for the deal's diminished value , and $45.5 billion in the fourth quarter for the AOL ( unit's decline. The entire value of the merger essentially evaporated into thin air less than two years after it was consummated. )
But it doesn't even take a merger widely considered the worst in corporate history to trump HP's (Fortune 500) Autonomy snafu. ,
Former networking giant JDS Uniphase ( had the previous record for an impairment charge. In 2001, after the dot-com bubble burst, )JDSU wrote $38.7 billion off its books -- the entire value of the handful of companies it had purchased over the previous two years.
Telecoms didn't have a good start to the last decade. Qwest Communications in late 2002 took a $30 billion writedown on the U.S. West purchase it made in 2000. Qwest was later purchased by CenturyLink (Fortune 500) for just over $12 billion. ,
Some telecoms didn't have a great end to the decade, either. In 2008, Sprint Nextel (Fortune 500) , wrote off $29.7 billion of the value of its $35 billion merger. It wrote off another $543 million in April 2012, as the company prepared to completely shut down the Nextel brand.
Write-downs happen when the value of an acquisition sinks, thanks to underperforming sales or because the acquired company's brand deteriorates. "Goodwill" is the accounting term for certain intangible assets, like a company's reputation. When those go south, accounting rules require companies to strip the asset off their balance sheet.
Most do that in one fell swoop, as HP did this past quarter -- knocking $8.8 billion off HP's profit and resulting in a quarterly loss.
Even though HP never had a single whopping write-down, like some of its technology peers, it collected a whole bunch of them recently: three in the past five quarters.
A year ago, HP wrote off $885 million of its $1.2 billion Palm purchase, which it had made in 2010. The WebOS software was a complete failure, culminating in the disastrous TouchPad tablet, which lasted exactly 49 days on the market before getting pulled off store shelves.
This summer, HP took a $8 billion writedown on its purchase of services business EDS, a deal which was valued at nearly $14 billion in 2008. HP also wrote down $1.2 billion that quarter on the Compaq brand, which it plans on phasing out. That move marked the finale of the controversial $25 billion takeover deal HP made in 2002 -- and a further diminishing of former CEO Carly Fiorina's costly legacy.
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