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HP says US DoJ is probing Autonomy

After HP accused Autonomy's management of cooking the books to inflate its value
Wed Jan 02 2013, 11:22
HP Discover Las Vegas Meg Whitman

THE UNITED STATES DEPARTMENT OF JUSTICE (DoJ) has opened an investigation into Automony, said PC flogger HP.

HP has accused the UK company's management of cooking the books to inflate its value before HP bought the firm last year.

DoJ representatives informed HP of the probe on 21 November, the firm said in its annual 10-K filing to the US Securities and Exchange Commission (SEC) on Friday.

Back in November, HP CEO Meg Whitman claimed that Autonomy falsified its accounts to inflate its worth after a whistleblower raised concerns over the firm's practices, and HP took an $8.8bn writedown on the acquisition of Autonomy.

"HP has been very transparent about the issues relating to Autonomy and the reasons why we announced an $8.8 billion non-cash impairment charge on 20 November," the firm said in the filing.

"The majority of this impairment charge, more than $5 billion, is linked to serious accounting improprieties, disclosure failures and outright misrepresentations discovered by HP's internal investigation into Autonomy's practices prior to and in connection with the acquisition."

HP said it is cooperating with the DoJ, the SEC and the UK's Serious Fraud Office on the matter.

"We continue to believe that the authorities and the courts are the appropriate venues in which to address the wrongdoing discovered at Autonomy," HP concluded.

Former Autonomy CEO Mike Lynch, who left HP last May and denies the company's allegations, struck a £6.3 billion deal last year with Whitman's predecessor, Leo Apotheker, to sell the company he co-founded.

Lynch strongly denied these accusations when they first came to light and in an open letter he called on HP's board to be more transparent regarding the specifics of the allegations.

"It was shocking that HP put non-specific but highly damaging allegations into the public domain without prior notification or contact with me, as former chief executive of Autonomy," he said.

"Having no details beyond the limited public information provided last week, and still with no further contact from you, I am writing today to ask you, the board of HP, for immediate and specific explanations for the allegations HP is making."

HP then fired back at Lynch's open letter by saying it expected to hear him answer questions under oath.

Aside from HP's writedown of Autonomy, things aren't much better for the firm. HP reported in November 2012 that revenue in its PC division fell by 14 percent from the fourth quarter of 2011, while its printing division revenue fell by five percent. Revenue in the firm's enterprise division, which includes server and networking equipment, fell by nine percent, while its services division revenue fell by six percent.

Only HP's software division, which includes the once overvalued Autonomy, showed any sign of life, posting a 14 percent increase in revenue, while the firm's financial services arm, which funds HP customers' investments to buy HP products and services, saw a nominal one percent increase in revenue. µ

 

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