SAN FRANCISCO/NEW YORK: Hewlett-Packard Co has levelled a charge of dodgy accounting at Autonomy, the British software company it bought last year, and is taking an $8.8 billion charge in the latest of a string of setbacks.
HP has discovered "serious accounting improprieties" and "a wilful effort by Autonomy to mislead shareholders" after a whistleblower came forward, the company said on Tuesday. It has alerted regulators on both sides of the Atlantic.
Irish-born mathematics whiz Lynch, who led the firm he had co-founded when it was sold to HP last year for a hefty $11.1 billion, denied the allegations.
He blamed mismanagement by its new owners for shredding its value.
"We are shocked, this is a big surprise, it's completely and utterly wrong and we reject it completely," he told Reuters by telephone.
"We have not heard anything from HP, they have not been in touch and we don't know what they are on about." Lynch left HP's employment in May.
HP's announcement on Tuesday sent the company's shares plunging 12 percent to a 10-year low of $11.71.
HP, which for decades was synonymous with technical excellence and innovation as one of the bedrock companies of Silicon Valley, has seen its market value sink to roughly $20 billion from $155 billion in April of 2000.
CEO Meg Whitman took the helm at HP a little over a year ago when her predecessor, Leo Apotheker, was fired after less than a year on the job.
Apotheker's big strategic move during his brief tenure was the acquisition of Autonomy, intended to hasten HP's transformation into a software and services company -- but which was criticized by many analysts at the time as over-priced.
Analyst Paul Morland at Peel Hunt said at the time that HP shareholders should be worried about the high price agreed, contracting margins and single-digit profit growth.
Whitman told an analyst call: "Most of the board was here and voted for this deal, and we feel terribly about that."
TRAIN WRECK
Tuesday's announcement came just three months after the company took a write-down of almost $11 billion on its EDS services division.
HP has for years relied on deal-making, acquiring businesses ranging from EDS to Compaq to Palm, but has largely failed to articulate a clear strategy or establish a strong position in growth businesses like computer services or mobile computing.
"To put it bluntly ... this story has been an unmitigated train wreck, and it seems every time management speaks to the Street, there is new negative incremental information forthcoming," said ISI Group analyst Brian Marshall.
HP said it has referred the alleged accounting wrongdoing at Autonomy to the U.S. Securities and Exchange Commission's enforcement division and the UK's Serious Fraud Office for civil and criminal investigation.
HP also said it would take legal action to recoup "what we can for our shareholders."
indiatimes.com
HP has discovered "serious accounting improprieties" and "a wilful effort by Autonomy to mislead shareholders" after a whistleblower came forward, the company said on Tuesday. It has alerted regulators on both sides of the Atlantic.
Irish-born mathematics whiz Lynch, who led the firm he had co-founded when it was sold to HP last year for a hefty $11.1 billion, denied the allegations.
He blamed mismanagement by its new owners for shredding its value.
"We are shocked, this is a big surprise, it's completely and utterly wrong and we reject it completely," he told Reuters by telephone.
"We have not heard anything from HP, they have not been in touch and we don't know what they are on about." Lynch left HP's employment in May.
HP's announcement on Tuesday sent the company's shares plunging 12 percent to a 10-year low of $11.71.
HP, which for decades was synonymous with technical excellence and innovation as one of the bedrock companies of Silicon Valley, has seen its market value sink to roughly $20 billion from $155 billion in April of 2000.
CEO Meg Whitman took the helm at HP a little over a year ago when her predecessor, Leo Apotheker, was fired after less than a year on the job.
Apotheker's big strategic move during his brief tenure was the acquisition of Autonomy, intended to hasten HP's transformation into a software and services company -- but which was criticized by many analysts at the time as over-priced.
Analyst Paul Morland at Peel Hunt said at the time that HP shareholders should be worried about the high price agreed, contracting margins and single-digit profit growth.
Whitman told an analyst call: "Most of the board was here and voted for this deal, and we feel terribly about that."
TRAIN WRECK
Tuesday's announcement came just three months after the company took a write-down of almost $11 billion on its EDS services division.
HP has for years relied on deal-making, acquiring businesses ranging from EDS to Compaq to Palm, but has largely failed to articulate a clear strategy or establish a strong position in growth businesses like computer services or mobile computing.
"To put it bluntly ... this story has been an unmitigated train wreck, and it seems every time management speaks to the Street, there is new negative incremental information forthcoming," said ISI Group analyst Brian Marshall.
HP said it has referred the alleged accounting wrongdoing at Autonomy to the U.S. Securities and Exchange Commission's enforcement division and the UK's Serious Fraud Office for civil and criminal investigation.
HP also said it would take legal action to recoup "what we can for our shareholders."
indiatimes.com
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