Published: 22 Nov 2012
Last Updated: 05 Aug 2014
The technology world has been eagerly following the twists and turns of the Lynch/HP bust up. The Silicon Valley giant stunned investors on Tuesday by accusing 'senior executives' at Autonomy of serious accounting improprieties and willfully misleading HP prior to its acquisition of Autonomy (for a cool $11.1bn in 2011), leading to a massive writedown on the US company’s assets.
Lynch has now retorted with a blistering attack on HP, saying that it has made several multi-billion dollar writedowns over the past few years and was now 'grabbing for straws' to pin the blame on someone for the latest one. Speaking to Sky News’s Jeff Randall, he said: 'HP came in with about 300 people, crawled over everything and you know what? They found nothing. And you know why? There was nothing to find. What actually happened is that they mismanaged Autonomy and in doing that have destroyed a lot of shareholder value.'
But Lynch hasn't shrugged off all of HP's accusations so easily. He has been forced to admit that he did indeed sell computer software at a loss and put some of the costs down as marketing expenses in Autonomy’s accounts. This is HP's number one gripe, as it claims that this practice boosted its sales income by as much as 15%. Lynch maintains that it added just 2% to the sales value. He also insists that HP knew that Autonomy also sold computer hardware. 'It’s known that Autonomy sells hardware; it’s been covered in our quarterly calls and annual reports,' he said.
Financial services firm Deloitte is also embroiled in this mess. As Autonomy's auditor, it has come in for a fair bit of flack from HP chief Meg Whitman for failing to spot the irregularities: 'Deloitte is not exactly brand X accounting firm,' she said. 'It is a little challenging to go in and say, 'Gee, we need to double check Deloitte'.' Deloitte has hit back with a statement saying that while it did indeed audit Autonomy's accounts up until year-end 2010, it cannot be responsible for Autonomy's books after that date.
This situation will probably get a fair bit stickier in the coming weeks, especially if angry investors start launching lawsuits against HP for failing to undertake proper due diligence on Autonomy. The cracks in HP are showing and no one will come out of this unscathed.
Lynch has now retorted with a blistering attack on HP, saying that it has made several multi-billion dollar writedowns over the past few years and was now 'grabbing for straws' to pin the blame on someone for the latest one. Speaking to Sky News’s Jeff Randall, he said: 'HP came in with about 300 people, crawled over everything and you know what? They found nothing. And you know why? There was nothing to find. What actually happened is that they mismanaged Autonomy and in doing that have destroyed a lot of shareholder value.'
But Lynch hasn't shrugged off all of HP's accusations so easily. He has been forced to admit that he did indeed sell computer software at a loss and put some of the costs down as marketing expenses in Autonomy’s accounts. This is HP's number one gripe, as it claims that this practice boosted its sales income by as much as 15%. Lynch maintains that it added just 2% to the sales value. He also insists that HP knew that Autonomy also sold computer hardware. 'It’s known that Autonomy sells hardware; it’s been covered in our quarterly calls and annual reports,' he said.
Financial services firm Deloitte is also embroiled in this mess. As Autonomy's auditor, it has come in for a fair bit of flack from HP chief Meg Whitman for failing to spot the irregularities: 'Deloitte is not exactly brand X accounting firm,' she said. 'It is a little challenging to go in and say, 'Gee, we need to double check Deloitte'.' Deloitte has hit back with a statement saying that while it did indeed audit Autonomy's accounts up until year-end 2010, it cannot be responsible for Autonomy's books after that date.
This situation will probably get a fair bit stickier in the coming weeks, especially if angry investors start launching lawsuits against HP for failing to undertake proper due diligence on Autonomy. The cracks in HP are showing and no one will come out of this unscathed.
