PCR Tech and IT retail, distribution and vendor news
The FBI is investigating Autonomy, the British company acquired by HP for $10 billion, after its parent company complained of accounting irregularities.
According to Mercury News, HP brought its concerns the US Securities and Exchange Commission, which in turn asked the FBI to investigate – standard procedure whenever a company reports an issue that could be criminal in nature.
Yesterday, HP alleged that senior staff at Autonomy had used various accounting tricks to falsely boost the company’s value. HP is now reportedly facing an $8.8 billion charge to have Autonomy realign its value with reality.
The acquisition was approved by HP’s former CEO Leo Apotheker and it’s been no secret that HP’s current chief executive, Meg Whitman, has been in doubt that the price paid was right.
She has claimed that Autonomy had been recording the sale of computers as software revenue and claiming the cost of making the machines as a marketing expense. In addition, revenue of long-term contracts was recorded as a single up-front payment instead of being stretched out over the duration of the contract.
“Most of the board was here and voted for this deal, and we feel terribly about that,” commented Whitman. “What I will say is that the board relied on audited financials. Audited by Deloitte – not ‘Brand X’ accounting firm, but Deloitte. During our very extensive due diligence process, we hired KPMG to audit Deloitte. And neither of them saw what we now see after someone came forward to point us in the right direction.”
However, the founder of Autonomy, Mike Lynch, who was dismissed from HP earlier this year has rejected the claims in a characteristically blunt fashion: “The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false. 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.”
–
Want to receive up-to-the-minute tech news straight to your inbox? Then click here to sign up for the completely free PCR Daily Digest and Newsflash email services. You can also follow PCR on Twitter and Facebook.
