Hewlett-Packard Co. Chief Executive Officer Meg Whitman misled shareholders when she said Autonomy Corp. would be “very profitable” after its acquisition while knowing a whistle-blower has warned of the company’s accounting irregularities, a lawyer for investors said.
Ramzi Abadou, who represents shareholders suing HP, its executives and ex-Autonomy CEO Mike Lynch, said that during a media interview Whitman blamed Autonomy’s disappointing results on integration issues while failing to disclose an audit was ordered after the whistle-blower came forward. In November 2012 HP, citing fraud, said it would take an $8.8 billion charge on the value of Autonomy, which it bought for $11 billion in 2010.
“It’s almost as if she is dying to reveal what she knows,” Abadou told U.S. District Judge Charles Breyer at a hearing today in federal court in San Francisco. “She chooses instead to mislead investors.”
Breyer is weighing requests by Palo Alto, California-based HP, Whitman and the other defendants to dismiss the case. He said his decision will depend on whether there’s sufficient evidence Whitman knew Autonomy was performing poorly because of accounting issues and withheld the information.
“It turns on what did she know and, given what she knew, was she reckless in omitting the alternative that had been presented to her,” Breyer said. He didn’t say when he would issue a ruling.
John Dwyer, Whitman’s attorney, said Abadou hasn’t shown that anyone at HP knew before June 2012 that there was another credible explanation for Autonomy’s poor performance or that Whitman made any false statements.
“I believe that in order to state a claim they need a allege that this is false statement,” he said during the hearing. “I don’t think they have.”
The case is Nicolow v. HP, 12-cv-05980, U.S. District Court, Northern District of California (San Francisco).