Feeds

HP: Autonomy had us believing in a false IDOL

'Negative margin, low-end, little or no software'

Top 5 reasons to deploy VMware with Tegile

HP has laid out the "accounting improprieties and misrepresentations" allegedly used by Autonomy to inflate its value just before HP bought the British biz.

Hapless Hewlett-Packard yesterday took an $8.8bn bath on the acquisition following the findings of an internal probe. It said a senior member of Autonomy's leadership team sparked that investigation by accusing the company of "questionable" practices.

HP pulled in bean counters at PricewaterhouseCoopers to conduct a "forensic review" of the numbers, under the gaze of HP exec veep John Shultz, and that revealed numerous issues.

In summary, HP claims software maker Autonomy "mischaracterised revenue from negative-margin, low-end hardware sales with little or no associated software content" as its Intelligent Data Operating Layer (IDOL) product, and "the improper inclusion of such revenue as 'license revenue' for purposes of the organic and IDOL growth calculations".

This low-end kit constituted roughly ten to 15 per cent of Autonomy's turnover.

The other major bone of contention is the reporting of licensing deals with resellers rather than with end-customers. HP said this was to "inappropriately accelerate revenue recognition, or worse create revenues where no-end user customer existed at the time of sale".

"This appears to have been a wilful 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," stated the Palo Alto-based tech vendor.

It added: "These misrepresentations and lack of disclosure severely impacted HP management's ability to fairly value Autonomy at the time of the deal. HP now believes Autonomy was substantially overvalued at the time of its acquisition."

The case has been referred to the Serious Fraud Office in the UK and the SEC financial watchdog in the States. HP said it is preparing to "seek redress" against various parties in the civil courts.

Autonomy founder Mike Lynch, who quit as the company's CEO in the summer, has disputed HP's claims. He said 300 people were involved in carrying out due diligence checks, and questioned the timing of the announcement ahead of some pretty nasty Q4 financial results from HP. ®

Beginner's guide to SSL certificates

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.