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HP claims Autonomy lied about finances
Source: Agencies |
November 21, 2012, Wednesday
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Print Edition
Print Edition
HEWLETT-PACKARD Co yesterday said a British firm it bought for US$9.7 billion last year lied about its finances, resulting in a massive write-down of the value of the business.
HP CEO Meg Whitman avoided calling it a fraud, but said there were "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corp Plc."
HP is taking an US$8.8 billion charge in its latest quarter largely to align the accounting value of Autonomy with its real value.
The revelation is another blow for HP, which is struggling to reinvent itself as personal computer and printer sales shrink.
Among other things, Autonomy makes search engines that help companies find vital information stored across computer networks. Acquiring it was part of an attempt by HP to strengthen its portfolio of high-value products and services for corporations and government agencies. The deal was greenlighted by Whitman's predecessor, Leo Apotheker, but closed in October 2011, three weeks into Whitman's tenure.
Whitman said Autonomy's financial illusion started to unravel after founder and CEO Mike Lynch left on May 23. A senior Autonomy executive then volunteered information about the accounting shenanigans, prompting an internal investigation.
The case has been referred to the United States Securities and Exchange Commission and the United Kingdom's Serious Fraud Office, she said. The company will also try to recoup some of the cash it paid for Autonomy through lawsuits.
On a conference call with Whitman, analyst Ben Reitzes of Barclays Capital asked who will be held responsible internally for the disastrous acquisition.
Whitman answered that the two executives that should have been held responsible - Apotheker and strategy chief Shane Robinson - are gone. But the deal was also approved, essentially, by the current board.
HP CEO Meg Whitman avoided calling it a fraud, but said there were "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corp Plc."
HP is taking an US$8.8 billion charge in its latest quarter largely to align the accounting value of Autonomy with its real value.
The revelation is another blow for HP, which is struggling to reinvent itself as personal computer and printer sales shrink.
Among other things, Autonomy makes search engines that help companies find vital information stored across computer networks. Acquiring it was part of an attempt by HP to strengthen its portfolio of high-value products and services for corporations and government agencies. The deal was greenlighted by Whitman's predecessor, Leo Apotheker, but closed in October 2011, three weeks into Whitman's tenure.
Whitman said Autonomy's financial illusion started to unravel after founder and CEO Mike Lynch left on May 23. A senior Autonomy executive then volunteered information about the accounting shenanigans, prompting an internal investigation.
The case has been referred to the United States Securities and Exchange Commission and the United Kingdom's Serious Fraud Office, she said. The company will also try to recoup some of the cash it paid for Autonomy through lawsuits.
On a conference call with Whitman, analyst Ben Reitzes of Barclays Capital asked who will be held responsible internally for the disastrous acquisition.
Whitman answered that the two executives that should have been held responsible - Apotheker and strategy chief Shane Robinson - are gone. But the deal was also approved, essentially, by the current board.
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