Hewlett-Packard accuses Autonomy of lying about finances during acquisition

HP takes $8.8bn writedown and calls on British and US authorities to investigate 'serious accounting improprieties'

  

guardian.co.uk, Dominic Rushe, business correspondent,  Tuesday 20 November 2012

Automomy founder Mike Lynch had been hailed as Britain's answer to Bill Gates.
Photograph: Matt LLoyd/Rex Features

Hewlett-Packard has revealed that it has taken an $8.8bn (£5.5bn) charge after "serious accounting improprieties" were discovered at Autonomy, the British tech firm it acquired in 2011 for more than $10bn.

The Silicon Valley giant called on the US and British authorities to investigate what it called "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy" that occurred prior to HP's acquisition.

The deal was brokered under HP's previous chief executive Leo Apotheker but finalised by current boss Meg Whitman, the former eBay chief and one time would-be governor of California.

Autonomy was a one of Britain's brightest tech stars and helps firms search data across different networks, specialising in the search of "unstructured data" such as voicemail. Founder Mike Lynch, a Cambridge tech star with a taste for koi carp and model railways, had been hailed as Britain's answer to Bill Gates. He initially called the merger "a historic day for Autonomy, our employees and the customers we serve". But the deal soon soured.

Lynch left in May as HP announced 27,000 job cuts world-wide as part of a $3bn-$3.5bn cost cutting programme. He had made $800m from the deal. Lynch had been close to Apotheker, who left after just 10 months with the company.

He initially appeared to have Whitman's full support but blamed a lack of independence at the company for his departure. The company in turn pointed to a "significant" decline in Autonomy's core licensing revenues and said the division needed new leadership.

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Autonomy misled HP about finances, Hewlett Packard says