Autonomy’s Lynch claims HP ‘misleading’ its shareholders

by Richard Crump

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20 Mar 2014

  • Financial Director
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Autonomy founder and CEO Mike Lynch

FORMER Autonomy chief executive Mike Lynch has launched a withering attack against HP ahead of its shareholder meeting, claiming the US technology giant is misleading its investors about the $5bn (£3bn) writedown taken on its acquisition of the UK software group in 2011.

The comments, made in an open letter to HP shareholders, will reignite his bitter war of words with HP chief executive Meg Whitman, who he accuses of making "incendiary and defamatory" allegations on behalf of HP.

"The evidence shows that HP is not just smearing us, but also misleading you, its shareholders. I ask you to help put things right," Lynch wrote in the letter.

HP has claimed that accounting misstatements at Autonomy were the reason for $5bn of the $8.8bn writedown it was forced to make a year after it $11.1bn acquisition of Autonomy and alleged that its management fraudulently boosted its revenues prior to the deal being signed.

In restated accounts published on Companies House earlier this year, HP drastically revised Autonomy's previously published profit and revenue figures and claimed to have uncovered "extensive errors (including misstatements)".

In his letter, Lynch claimed that HP "selectively leaked documents and information to the international media, frequently using material taken out of context to create false impressions and smear our reputations" and challenged Whiteman to "present the detailed evidence that justifies those allegations".

Lynch also asked HP to reveal evidence to support its claims that Deloitte, Autonomy's auditors, has missed certain items and been misled, and disclose valuation reports made by independent advisers following the acquisition "which explicitly included Autonomy's hardware sales and confirmed the value of the company at $11bn?"

In a statement HP said: "As HP has previously reported, it uncovered numerous accounting irregularities at Autonomy prior to its acquisition by HP. HP reported those irregularities to appropriate civil and criminal regulators in the US and UK. HP continues to cooperate in ongoing investigations by those regulators."

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