Feeds

HP: Autonomy overstated 2010 profits, cuts them by 81 PER CENT

Former Autonomists deny claim, say HP's audit cooks the books

Intelligent flash storage arrays

HP has filed at the UK's Companies House the results of an audit of the 2010 financial results of two of Autonomy's eight divisions, which says that the UK software firm's revenues were actually just 54 per cent of its initially stated figure, and that their profit figure for the year needs to be cut by a whopping 81 per cent.

"These restatements, and the reasons for them, are consistent with HP's previous disclosures regarding accounting improprieties in Autonomy's pre-acquisition financials," an HP spokesman told The Daily Telegraph in a statement.

"The substantial work necessary to prepare these accounts has revealed extensive accounting errors and misrepresentations in the previously issued 2010 audited financial statements, including the problems previously identified by HP."

Autonomy reported profits of £105.7m for fiscal year 2010, but according to HP's beancounters the process for divining that figure was flawed by "transfer pricing revenue," and accounting policy changes. The real profit was just £19.6mm, they said, and revenues should be £81.3m, not the original figure of £175.6m.

According to the filing, HP claims that Autonomy reported sales where "collectability issues existed," (i.e., from firms that couldn't pay) and from "barter-type transactions." HP also suggests that Autonomy didn't take into account the costs of customizing software for specific deals, and overvalued service contracts.

HP's filing also warned that the company was still going through Autonomy's books, and there may be more adjustments to the software house's figures in the future.

However, Autonomy's former management have hit back strongly, saying HP is using its own dodgy accounting practices to reduce its liabilities and to try to game a tax rebate from the UK tax authorities.

"We continue to reject these allegations by HP," the management team said in a statement. "Given the size of HP's writedown, we are very surprised by the small size of these adjustments in Autonomy Systems Limited attributed to the ongoing accounting dispute, which represent a few per cent of group revenue.

"Other causes of the change including explicitly stated changes in accounting policy. We note that a majority of the change in numbers is due to transfer pricing between jurisdictions, a mechanism which often reduces a company's tax bill in the UK. We hope the UK government will take a robust position in rebuffing HP's attempts to deprive it of over £38m in tax revenue."

HP has put in a tax refund request to the UK's notoriously tight-fisted Inland Revenue, but is still waiting on a response. Regulators in the UK and US have launched investigations into the affair, but these could take years to sort out.

In the meantime, HP is still dealing with the fallout from the $8.8bn write-down it made after buying Autonomy for $10.24bn back in 2011, when HP was headed up by former CEO Léo Apotheker. A shareholder lawsuit is ongoing, and current CEO Meg Whitman is in the hot seat for allegedly ignoring warning signs about the deal. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Spies, avert eyes! Tim Berners-Lee demands a UK digital bill of rights
Lobbies tetchy MPs 'to end indiscriminate online surveillance'
How the FLAC do I tell MP3s from lossless audio?
Can you hear the difference? Can anyone?
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
prev story

Whitepapers

A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
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.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.