Hewlett-Packard: Evidence of accounting improprieties
Mike Lynch, the former chief executive officer of Autonomy Corp., called on Hewlett-Packard Co.’s board to explain its allegations that Autonomy falsified financial statements that led to an $8.8 billion writedown.
Lynch, in a letter sent to news organizations, asked Hewlett-Packard’s board for “immediate and specific explanations” of its claims, along with supporting documents.
Hewlett-Packard Co. said it’s conducting an “intense” internal investigation and has uncovered extensive evidence of improper accounting at Autonomy. Hewlett-Packard said that the matter was now in the “hands of authorities.”
“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,” Hewlett- Packard said in an e-mailed statement.
By making a direct appeal to the board, Lynch is effectively bypassing Hewlett-Packard CEO Meg Whitman, who fired him in May for poor performance at Autonomy. The Palo Alto, California-based computer maker said on Nov. 20 that Autonomy managers misreported finances to make the company appear more successful than it was. Whitman was on the board when Hewlett- Packard agreed to buy Autonomy for $10.3 billion last year.
“Autonomy’s finances, during its years as a public company and including the time period in question, were handled in accordance with applicable regulations and accounting practices,” Lynch wrote. “I utterly reject all allegations of impropriety.”
Last week, Hewlett-Packard said $5 billion of the writedown was related to “accounting improprieties,” including booking hardware revenue to appear as more profitable software. The company said it found $200 million in wrongly categorized or falsified sales.
Direct Appeal
In his letter today, Lynch asked Hewlett-Packard to publish the calculations behind the $5 billion figure and provide him with a copy of the report it’s turned over to U.S. and U.K. regulators.
“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,” Lynch wrote in his letter.
Autonomy, a Cambridge, England-based maker of software for searching corporate libraries of information stored in various computer-file formats, had been on the block for months before agreeing to the Hewlett-Packard deal, announced in August 2011.