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. ®

Similar topics


Other stories you might like

  • Google Pixel 6, 6 Pro Android 12 smartphone launch marred by shopping cart crashes

    Chocolate Factory talks up Tensor mobile SoC, Titan M2 security ... for those who can get them

    Google held a virtual event on Tuesday to introduce its latest Android phones, the Pixel 6 and 6 Pro, which are based on a Google-designed Tensor system-on-a-chip (SoC).

    "We're getting the most out of leading edge hardware and software, and AI," said Rick Osterloh, SVP of devices and services at Google. "The brains of our new Pixel lineup is Google Tensor, a mobile system on a chip that we designed specifically around our ambient computing vision and Google's work in AI."

    This latest Tensor SoC has dual Arm Cortex-X1 CPU cores running at 2.8GHz to handle application threads that need a lot of oomph, two Cortex-A76 cores at 2.25GHz for more modest workloads, and four 1.8GHz workhorse Cortex-A55 cores for lighter, less-energy-intensive tasks.

    Continue reading
  • BlackMatter ransomware gang will target agriculture for its next harvest – Uncle Sam

    What was that about hackable tractors?

    The US CISA cybersecurity agency has warned that the Darkside ransomware gang, aka BlackMatter, has been targeting American food and agriculture businesses – and urges security pros to be on the lookout for indicators of compromise.

    Well known in Western infosec circles for causing the shutdown of the US Colonial Pipeline, Darkside's apparent rebranding as BlackMatter after promising to go away for good in the wake of the pipeline hack hasn't slowed their criminal extortion down at all.

    "Ransomware attacks against critical infrastructure entities could directly affect consumer access to critical infrastructure services; therefore, CISA, the FBI, and NSA urge all organizations, including critical infrastructure organizations, to implement the recommendations listed in the Mitigations section of this joint advisory," said the agencies in an alert published on the CISA website.

    Continue reading
  • It's heeere: Node.js 17 is out – but not for production use, says dev team

    EcmaScript 6 modules will not stop growing use of Node, claims chair of Technical Steering Committee

    Node.js 17 is out, loaded with OpenSSL 3 and other new features, but it is not intended for use in production – and the promotion for Node.js 16 to an LTS release, expected soon, may be more important to most developers.

    The release cycle is based on six-monthly major versions, with only the even numbers becoming LTS (long term support) editions. The rule is that a new even-numbered release becomes LTS six months later. All releases get six months of support. This means that Node.js 17 is primarily for testing and experimentation, but also that Node.js 16 (released in April) is about to become LTS. New features in 16 included version 9.0 of the V8 JavaScript engine and prebuilt Apple silicon binaries.

    "We put together the LTS release process almost five years ago, it works quite well in that we're balancing [the fact] that some people want the latest, others prefer to have things be stable… when we go LTS," Red Hat's Michael Dawson, chair of the Node.js Technical Steering Committee, told The Register.

    Continue reading

Biting the hand that feeds IT © 1998–2021