Feeds

HP: Autonomy had us believing in a false IDOL

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

Website security in corporate America

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. ®

Reducing the cost and complexity of web vulnerability management

More from The Register

next story
Hey, Scots. Microsoft's Bing thinks you'll vote NO to independence
World's top Google-finding website calls it for the UK
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
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
OECD lashes out at tax avoiding globocorps' location-flipping antics
You hear that, Amazon, Google, Microsoft et al?
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.