Ex-Autonomy execs: HP's latest wad blows apart fraud allegations
Top bods claim IT titan's latest court filing is smoking gun of 'reckless aggression'
Another week, another round in the ongoing bunfight between HP and the former management team of Autonomy. This time, the ex-Autonomy bods have claimed that new court documents filed by HP prove the latter has misrepresented the reasons why it had to write down $8.8bn in its botched acquisition of Autonomy in 2011.
In a lengthy blog post on Thursday, the former Autonomy execs reiterated their earlier claims that the company was completely open with independent auditors throughout HP's due diligence process and that the auditors never found any issues with Autonomy's accounting practices.
In addition, they said, HP's latest court filing reveals for the first time that the real reason for the $8.8bn charge was HP's "aggressive assumptions" about what it stood to gain from the deal, rather than any misrepresentation on Autonomy's part.
HP's filing states that it believed the Autonomy buy would result in $7.4bn in "revenue synergies" – business jargon meaning the amount the combined company would bring in that the two companies would not if they remained apart – a figure the Autonomy execs described as "unprecedented."
Needless to say, that didn't pan out – not by a long shot – and the filing later reveals that the difference between HP's initial estimates and the reality accounted for $5.3bn of the writedown.
The Autonomy bods pointed out a 2012 HP press release acknowledging that "the balance of the impairment charge is linked to the recent trading value of HP stock and headwinds against anticipated synergies and marketplace performance" – meaning it had nothing to do with Autonomy.
"Autonomy's management cannot be held responsible for HP's excessive forecasting of synergies," the team's Thursday blog post stated. "The write off is due to HP's own recklessness and not due to any accounting improprieties."
Furthermore, Autonomy's latest missive claims HP's documents prove that it knew Autonomy sold hardware and that its valuation of the company included those hardware sales. HP has alleged that Autonomy's accountants wrongly booked hardware sales as software sales to plump up its revenue figures.
Finally, the blog post noted that HP's own CFO argued against the Autonomy buyout – citing "HP's history of not executing on its major acquisitions" – but that HP sealed the deal in haste anyway because it feared competitive bids.
Naturally, HP maintains that it was misled by Autonomy execs. When contacted by The Reg for comment, an HP UK spokesperson claimed in the following statement:
As HP has stated on numerous occasions, when Autonomy management was confronted by HP on the question of their pre-acquisition hardware sales, they repeatedly described them as either 'appliance sales' or 'strategic sales' designed to further purchases of Autonomy software. HP was not told the truth – that Autonomy's pre-acquisition hardware sales were done with the sole purpose of artificially inflating Autonomy's revenues.
The former Autonomy execs' latest blog post is part of their campaign to scuttle the proposed settlement of a lawsuit brought against HP by its own shareholders over the botched Autonomy deal. The case is being weighed by US District Judge Charles Breyer in the Northern District of California.
For its part, HP says it is planning to bring separate lawsuits against former Autonomy CEO Mike Lynch; the company's former CFO, Sushovan Hussain; the UK arm of Deloitte & Touche, which audited Autonomy for the acquisition; and potentially anyone else it can think of. ®