HP reveals €6.87bn Autonomy writedown
Hewlett-Packard has announced an $8.8 billion (€6.87 billion) writedown in the value of its $11bn Autonomy acquisition and alleged “serious” accounting improprieties at the software company.
In its fourth-quarter earnings statement, HP said the majority of the impairment charge, more than $5 billion, was related to the accounting improprieties, “disclosure failures and outright misrepresentations at Autonomy”, which occurred before the acquisition.
It said this would have an impact on the expected future financial performance of Autonomy over the long term. HP acquired Autonomy in August 2011. HP shares fell nearly 12 per cent yesterday morning in New York.
On an analyst conference call, Meg Whitman, HP’s chief executive, said the improprieties were discovered after an internal investigation. This followed a senior member of Autonomy’s management team coming forward following the departure of Mike Lynch, Autonomy’s Irish-born founder, on May 23rd.
The review included a third-party forensic review of Autonomy’s historical financial results. HP has contacted the Securities and Exchange Commission’s enforcement division and the UK’s Serious Fraud Office.
Ms Whitman said the company had requested that both agencies look at criminal and civil investigations. In addition, HP intended to seek redress against various parties “in the appropriate civil courts to recoup what we can for our shareholders”.
Ms Whitman said she expected the legal process to take a long time. “I expect this is a multi-year journey through the courts in both countries.”
In a statement, Mr Lynch said: “The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false. HP’s due diligence review was intensive, overseen on behalf of HP by KPMG, Barclays and Perella Weinberg. HP’s senior management has also been closely involved with running Autonomy for the past year.
“It took 10 years to build Autonomy’s industry-leading technology and it is sad to see how it has been mismanaged since its acquisition by HP.”
– Copyright The Financial Times Limited 2012