LONDON Feb 4 Hewlett Packard said
Autonomy, the software firm it bought in 2011, overstated
profits at one of its main British units by 81 percent in the
year before it was sold in Britain's biggest ever technology
Little over a year after the $11.7 billion acquisition, the
Silicon Valley company wrote down the value of Autonomy by $8.8
billion, accusing the management of accounting irregularities.
Autonomy was founded and led by British entrepreneur Mike
Lynch, who has repeatedly denied the allegations.
In the first specific allegation since the writedown, HP
said it had refiled 2010 accounts for Autonomy Systems Limited,
one of its British operating units, revising the annual revenue
down by 54 percent to 81 million pounds.
Net profit for the period was reduced by 86 million pounds
($133 million) to 19.6 million pounds according to the filing,
seen by Reuters, that HP says it has made to Companies House -
the organisation that registers UK companies.
The drop, $133 million at 2010 exchange rates, compares with
reported 2010 net profit for Autonomy as a whole of $217
million, according to the company's annual report.
Lynch had previously said that differences in IFRS and U.S.
GAAP accounting standards appeared to have had a role in some of
"The extensive investigations undertaken by Hewlett-Packard
... into the past accounting practices of the group, have
revealed extensive errors (including misstatements) in the
previously issued financial statements," the revised accounts
HP, based in Palo Alto, California, has said it passed
information from an unidentified whistleblower to the U.S.
Department of Justice, the SEC and Britain's Serious Fraud
Office. Until now, however, few details had emerged about the
nature of the alleged irregularities.
HP said most of the reduction in profits was due to
"fundamental errors", with the remainder put down to differences
in accounting policies used by HP and Autonomy.
Lynch's spokeswoman, Vanessa Colomar, said Lynch and the
former senior management of Autonomy rejected the allegation of
overstated profits which was contained in the refiled accounts.
Colomar added that the size of the adjustments in the 2010
results did not fit with the scale of HP's $5 billion writedown.
"We continue to reject these allegations by HP," she said.