Arbitration problems… Yep, and it’s a binding arbitration, therefore it has to be followed and accepted. Hmmm, HPE knew things may go south, they rolled the dice and lost. Not a big deal and the $666M number will not change anyone’s future here.
I was surprised that damages were so far, after all things may have been smaller but HPE will pay up to DXC - $631.8 million in damages and $34.3 million in pre-award interest as well as post-award interest at 3 percent annually compounding until payment.
The arbitration demand asserted that HPE is required to “indemnify DXC” for any “transferred long-term capitalized lease obligations of the ES Business that exceed the threshold amount of $250 million.”
DXC contended that this $250 million threshold was exceeded by approximately $1.0 billion because the “valuation of the assets underlying certain leases did not justify their classification as operating leases.”
It seems like that DXC is maintaining that the HPE Enterprise Services’ revenue for those leases did not justify the operating leases in question.
The lesson to be learned from the HPE-DXC accounting dispute is to double down on the nitty-gritty