HP CEO Meg Whitman
One year after buying UK-based software giant Autonomy for US$10bn, HP today reported it has had to write down US$8.8bn on its full-year 2012 results because of the acquisition.
Autonomy, which was founded and headed up by Carrick-on-Suir native Dr Mike Lynch, is a database and enterprise search technology player that HP paid US$10bn for to buy last year and Lynch is understood to have made US$800m from the deal.
However, HP today reported that serious accounting improprieties have been discovered at Autonomy, causing it to write-down US$8.8bn on its Q4 and full-year 2012 results.
In terse tones, HP said today: “The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP’s acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term.
“The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge,” HP said.
For the full year, HP reported revenues of US$120bn, down 5pc on 2011.
Fourth-quarter revenues came in at US$30bn, down 7pc from US$32.1bn last year.
HP reported a loss of US$6.9bn for the quarter.
Auditors didn’t notice anything suspicious about Autonomy deal
In an earnings call, CEO Meg Whitman said the Autonomy acquisition was audited by Deloitte, which was in turn audited by KPMG and neither company found anything suspicious about the deal.
She said a complaint has been filed with the US Securities and Exchange Commission and UK law enforcement.
HP also plans to file civil charges against Autonomy’s former owners.
In May, HP reported revenues fell 3pc to US$30.7bn and that 27,000 workers were to be let go. At the time, however, it said software revenues had been boosted 27pc by the acquisition of Autonomy. During the same announcement, it was revealed that Lynch was stepping down from the company and could be replaced by HP’s chief strategy officer Bill Veghte.
Lynch set up Autonomy in 1996 as a spin-off from his first company, Cambridge Neurodynamics, which began with a personal loan. In 2006, the company turned in revenues of US$250m for the year. At one point in Autonomy’s history, the company had a market capitalisation of stg£8bn.
