HPE has been ordered to pay $666m to DXC Technology stemming from an account dispute after the IT services firm was spun out in 2017.
In an SEC filing yesterday, DXC claims an arbitration panel has concluded that HPE should pay $666m to DXC, made up of $631.8m in damages and $34.3m in pre-award interest, as well as interest to the tune of three per cent per annum until payment is completed.
HPE describes the disagreement as an "accounting dispute" over its "separation and distribution agreement" with DXC after DXC span out from HPE's Enterprise Services arm in April 2017.
In a financial report for its quarter ending 30 September, DXC claimed that the disagreement relates to HPE trying to change the classification of the leases liable to its Enterprise Services arm from long-term capital to operational leases. This means that, upon spinning out of HPE, DXC recorded a lease liability of $977m as opposed to a limit of $250m initially agreed in the separation agreement.
The victory comes at an opportune time for DXC Technology, which has posted declining revenues and profits for two consecutive quarters.
In its latest Q1 results, revenues fell by seven per cent to $4.89bn, while pre-tax income from continuing operations fell by 43 per cent to $206m.
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