HP responds to Autonomy founder's memo with 'extensive evidence'

HP responds to Autonomy founder's memo with 'extensive evidence'

Summary: HP claims it has "uncovered extensive evidence" that Autonomy employees tried to "inflate the underlying financial metrics of the company in order to mislead investors and potential buyers."


Just a few hours after Autonomy's founder fired a letter at Hewlett-Packard's board of directors, the case has taken another turn with HP's near-immediate response.

This all started after HP admitted in its fourth quarter earnings statement last week that the Autonomy purchase cost its software unit up to $8.8 billion.

But HP also said that "the majority of this impairment charge is linked to serious accounting improprieties" and "misrepresentations" within Autonomy, which were said to have taken place before the merger cleared last fall.

Earlier today, former Autonomy CEO Mike Lynch penned an open memo to HP's board, rejecting "all allegations of impropriety" on his part along with adding in a lot of pointed questions directed at HP.

Here's a copy of HP's response thus far, via The Wall Street Journal:

HP has initiated an intense internal investigation into a series of accounting improprieties, disclosure failures and outright misrepresentations that occurred prior to HP’s acquisition of Autonomy. We believe we have uncovered extensive evidence of a willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers.

The matter is in the hands of the authorities, including the UK Serious Fraud Office, the US Securities and Exchange Commission’s Enforcement Division and the US Department of Justice, and we will defer to them as to how they wish to engage with Dr. Lynch. In addition, HP will take legal action against the parties involved at the appropriate time.

While Dr. Lynch is eager for a debate, we believe the legal process is the correct method in which to bring out the facts and take action on behalf of our shareholders. In that setting, we look forward to hearing Dr. Lynch and other former Autonomy employees answer questions under penalty of perjury.

For more coverage of the latest HP-Autonomy news on ZDNet:

Topics: Hewlett-Packard, Enterprise Software, Legal, Software

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  • HP has used Autonomy to deflect their own serious problems

    Unfortunately HP is moving from one drama to another, HBO should commission a film.

    Seriously the accusations HP have made about Autonomy via the media is a mistake and does reflect badly on HP's leadership.

    One, making serious accusations of fraud should have been carried out using the Financial & Legal authorities. Two, it dents HP's brand as it leads people to believe that there are the wrong people running the company at the highest levels if a takeover of this magnitude and due diligence did not detect any possible fraud.

    Meg Whitman should never have let this gone public until it had been investigated. I believe she and the board are trying to deflect the deep problems within HP by using Autonomy as a scape goat.

    Dr. Lynch has every right to reply via the media as HP opened the door on this using the media.

    Autonomy was a public company audited by a major accounting company if there is any evidence of fraud they should also be held accountable.

    Once again I am glad I am not a major HP shareholder I would sack the whole lot as this could be the tip of the iceberg that sinks HP. I say this with sadness as HP was once a great company.
  • I see a lawsuit coming

    The only question is whether HP is going to get around to suing Dr. Lynch for fraud before he sues HP for libel.
    John L. Ries
    • Finally

      A lawsuit between technology companies which does not relate to patents!
      • There is onlyone company here

        So any lawsuit will have to be personal.
        x I'm tc
        • Maybe

          But at least it's not about patents and a tech company is involved!
  • Either way, HP is at fault.

    If it turns out that HP got the wool pulled over it's eyes, then, Either Hp's Acquisitions Dept. is incompetent and should all be fired, it's Accounting dept. is incompetent and should all be fired, it's Board is incompetent and should all be fired, or, and most likely the case, All of the above. There is NO WAY POSSIBLE that a company of HP's calibur shouldn't have caught this BEFORE spending $5.5 BILLION to purchase this company. You can do it right, or you can do it fast. Apparently HP was only interested in speed. If it turns out that HP is only blaming others for it's own laziness, then let the Death Nell toll. For HP will have rung it's own bell.
  • Not necessarily....

    The same thing happened with the AOL/Time Warner merger. AOL grossly over-inflated their value and TW had to write down 45.5 Billion in AOL's value. It took them two years after the acquisition to figure out AOL was a worthless pile of crap that counted all the millions of free trial CD users as if they were actual paying customers. Sometimes, even if you do your due diligence, you don't discover the fraud and misrepresentation until you have full control of the company and its books.
    Thomas Kolakowski