As reported by the Financial Times, the managers of Hewlett-Packard Co. received information on Autonomy Corp.s accounting in the months before the signaling of misconduct practices which incited a writedown.
The newspaper reported that auditors documented Autonomy Corp.s practice of providing customers with hardware at a loss. The records were given to Hewlett-Packard after the acquisition of the software manufacturer, which is based in the U.K. The Financial Times cited the records as well as an unidentified person with knowledge of the finances. Later, Hewlett-Packard was alarmed by the whistle-blower and has claimed the practices in question misleading.
Mike Lynch, who is the former Chief Executive Officer of Autonomy Corp., said that the information provided by the Financial Times sabotages accusations by Meg Whitman, who is the Chief Executive Officer of Hewlett-Packard. Autonomy Corp. costed HP 11.11 billion dollars in 2011 to acquire. The latter also took a writedown estimated to 8.8 billion dollars in November 2012, more than 5 billion dollars of which were attributed to Autonomys accounting, including the hardware sales.
The former managers of Autonomy Corp., including Mr. Lynch, have denied any misconduct. They also said that Hewlett-Packard Co. mismanaged Autonomy after the finalization of the deal.
According to the information published on the Financial Times, an audit made in December 2010 recorded hardware sales that were estimated to 9% in comparison to the 10 to 15% of hardware sales cited by Hewlett-Packard as showing the extent of the allegedly misleading accounts. The Chief Executive Officer of HP – Meg Whitman – was copied on an October 2011 e-mail concerning the difficulties Autonomy met while selling the hardware of Hewlett-Packard.
The Financial Times reported that Hewlett-Packard said that while it eventually learned about the hardware sales, it was not aware of the inaccuracies until the whistle-blower came forward.
Mike Lynch said in an e-mailed statement about the article of the Financial Times, which was cited by Bloomberg: “Meg Whitman accused Autonomy of ‘active concealment’ but these revelations prove we were open and transparent with our auditors who continue to stand by the accounts. Meg Whitman must answer to her shareholders with what she knew, when she knew it and how she and her senior colleagues made such factually incorrect and serious statements that were so easy to check from the audit packs.”
Hewlett-Packard Co.s shares last traded at $30.02, marking a one-year change of +78.80%. According to CNN Money, the 24 analysts offering 12-month price forecasts for Hewlett-Packard Co have a median target of $28.25, with a high estimate of $40.00 and a low estimate of $17.00. The median estimate represents a -5.90% decrease from the last close.
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