(The following is a reformatted version of a statement issued by
Mike Lynch on behalf of the former management team of Autonomy.
The statement was confirmed.)
“HP is backtracking.
In a message posted on this website a week ago today, we urged
Meg Whitman to use HP’s annual 10-K filing to provide a full
explanation of the allegations of accounting impropriety at
Autonomy which she made on November 20. Unfortunately, she did
not do so. HP finally filed its 10-K yesterday, more than a week
later than usual, but again failed to provide any detailed
information on the alleged accounting impropriety, or how this
could possibly have resulted in such a substantial write down.
HP’s failure to provide us and its own shareholders with clarity
on these crucial issues does not come as much of a surprise.
Ever since putting out those very serious but non-specific
allegations last month, HP has refused to disclose either the
substance of its allegations or any supporting evidence.
In fact, HP’s 10-K filing appears to raise many more questions
than it answers. Having had further time to study HP’s filing
since it was released near midnight last night (UK time), it is
apparent that a number of the statements contained within the
filing are materially different from HP’s previous commentary on
these issues. It also appears that the company is back-tracking
on a number of key points that under-pinned its original
1. How much of the Autonomy write down is actually being blamed
on accounting improprieties?
In its November 20 statement, HP stated that “The majority of
[the Autonomy] impairment charge, more than $5 billion, is
linked to serious accounting improprieties, misrepresentation
and disclosure failures” committed by “former members of
Autonomy’s management team”. However, HP’s 10-K filing refers
much more equivocally to a $5.7 billion goodwill impairment
charge that “incorporates” the alleged accounting improprieties
at Autonomy. So, how much of the $5.7 billion is being directly
attributed by HP to accounting improprieties, and how much
should in fact be attributed to other changes in business
performance, earnings projections and discount rate?
2. Does HP have facts or beliefs?
In its November 20 statement, HP was definitive in accusing
“former members of Autonomy’s management team” of “serious
accounting improprieties, misrepresentation and disclosure
failures”, stating these matters as fact. However, HP’s 10-K
filing is materially weaker, referring to its interpretation of
accounting improprieties which it “believes” to have taken place
at Autonomy. Why did it make such definitive assertions before
any independent assessment of the matter, and why is it less
confident now than it was a month ago?
3. Why does the 10-K contain less detail than its last
HP’s November 20 statement clearly leveled the accusations at
“former members of Autonomy’s management team”. However, HP’s
10-K filing does not repeat - let alone expand upon - this
specific detail, or indicate who it is accusing of wrongdoing.
Every time we ask for more information, we get less.
Today we renew the call for HP to release the PwC report on
which its allegations are based, along with any other relevant
supporting evidence that was behind the statements of November
20, and explain the material differences between those
statements and the 10-K.
It is time for Meg Whitman to stop making allegations and to
start offering explanations.”
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