The problems facing troubled tech giant
Hewlett-Packard mounted Tuesday after it wrote down its $10.3 billion
dollar purchase of software firm Autonomy, saying the deal had been
completed based on fraudulent information presented by the British
company.
HP, which until recently was the world's largest PC maker, said it
was writing down 8.8 billion dollars of the 10.3 billion dollars it
paid for Autonomy in 2011.
In a statement HP accused Autonomy of "serious accounting
improprieties, disclosure failures and outright misrepresentations"
and said it had asked both the Securities and Exchange Commission, as
well as Britain's Serious Fraud Office to investigate.
"This appears to have been a willful effort on behalf of certain
former Autonomy employees to inflate the underlying financial metrics
of the company in order to mislead investors and potential buyers,"
HP said.
"These misrepresentations and lack of disclosure severely impacted
HP management's ability to fairly value Autonomy at the time of the
deal."
In a conference call with analysts, HP chief Meg Whitman claimed
that the irregularities were only discovered after Autonomy founder
Mike Lynch left the company following the completion of the deal.
The former Autonomy management team rejected the allegations,
saying in a statement to the New York Times that HP's mismanagement
had ruined the company they spent a decade building.
"The former management team of Autonomy was shocked to see this
statement today, and flatly rejects these allegations, which are
false," the group said in a statement.
"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," it continued.
The disclosures helped send HP's shares sharply lower in US
trading Tuesday in conjunction with a disappointing earnings report
which saw the company book a fourth quarter loss of 6.9 million
dollars, compared to a profit of 239 million dollars a year ago.
Revenue sank 6.5 per cent to 30 billion dollars.
The company is in the midst of an aggressive turnaround effort
under Whitman. She was installed earlier this year to replace Leo
Apotheker, a German executive who approved the Autonomy deal during
his brief stint at the head of the company.
