Autonomy’s Lynch Hasn’t Heard From HP in Accounting Row
Mike Lynch, the entrepreneur who sold Autonomy Corp. to Hewlett-Packard Co. (HPQ) last year, said he still hasn’t been contacted by the company since his team was accused of miscategorizing sales in an $8.8 billion writedown.
“We haven’t heard anything from anybody,” Lynch said in an interview with Bloomberg News at a conference in London today. “It’s a very strange way of doing things, but we’d love to hear more.”
Hewlett-Packard, which published the allegations on Nov. 20., hasn’t explained its claims that accounting errors contributed $5 billion to the writedown, Lynch said. Some of the controversy may be down to differences in international and U.S. accounting standards, he said.
Former Hewlett-Packard Chief Executive Officer Leo Apotheker, who bought Autonomy to diversify away from hardware and expand in software for businesses, left in 2011 after less than a year on the job following repeated strategy shifts and forecast cuts. Meg Whitman, who took over from him, said the misrepresentations caused Hewlett-Packard to value Autonomy incorrectly before the deal, which ultimately cost the Palo Alto, California-based company $11.1 billion.
“I absolutely reject what’s been said,” said Lynch, who said he was notified about the writedown with a text message. “I understand why they had to do a write off. I understand why they wanted to get it into that year.”
Hewlett-Packard hasn’t contacted Lynch and has turned over all of its evidence to the U.S. Securities and Exchange Commission and the Serious Fraud Office in the U.K., said a spokeswoman for the company who declined to comment further.
Hewlett-Packard rose as much as 5.7 percent to $14.59 in New York trading and was up 3.9 percent as of 9:59 a.m., valuing the company at $28.2 billion.
Lynch, who was fired from the combined company in May, said he had expected the writedown because Cambridge, England-based Autonomy had lost much of its talent under Hewlett-Packard.
The writedown was another blow for Hewlett-Packard, which is already suffering from management turmoil and slowdowns in its personal-computer, printer and technology-services businesses.
Lynch founded Autonomy as a spinoff from the University of Cambridge in 1996 and built it into the U.K.’s second-largest software company with customers including Coca-Cola Co. (KO)
His technology, enabling the search of a broad range of information, known as unstructured data, including e-mails, music, video and social networks such as Facebook Inc., became a hit with organizations seeking to organize increasing amounts of data and information.
John Schultz , Hewlett-Packard’s general counsel, has said among those practices, which accounted for $200 million in miscategorized or false revenue, was reselling Dell Inc. (DELL) hardware and recording them as software revenue.
Still, Hewlett-Packard knew about this practice ahead of time and continued it after the acquisition, Lynch said.
“Meg is so off of my Christmas card list this year,” he said.
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