Mike Lynch, the former chief executive officer and founder of Autonomy, the software maker acquired by Hewlett-Packard Company (NYSE:HPQ) for $11.1 billion in October 2011, once again defended the accounting practice of his former company in a letter to shareholders.
Hewlett-Packard Company (NYSE:HPQ) wrote down $8.8 billion accounting charge in November 2012 citing that it discovered “serious accounting improprieties” and “outright misrepresentations” at Autonomy related to the acquisition. The shareholders of the company filed a lawsuit against it in connection with the billions of $8.8 billion losses it recorded from the Autonomy deal.
Was Ben Graham's big purchase of GEICO shares actually a value investment? Perhaps it was contrary to what many believe. "In 1948, we made our GEICO investment and from then on, we seemed to be very brilliant people." -- Benjamin Graham, 1976 Both Benjamin Graham and Warren Buffett can attribute a large part of their Read More
Mike Lynch strongly and repeatedly denied the allegations by Hewlett-Packard Company (NYSE:HPQ) that Autonomy practiced accounting irregularities in the deal. In his latest letter to shareholders, Lynch said Hewlett-Packard Company (NYSE:HPQ) is not just smearing the former management team of Autonomy but also misleading its shareholders.
Mike Lynch: HP selectively leaked documents
Mike Lynch emphasized the fact that Hewlett-Packard Company (NYSE:HPQ) failed to provide evidence or information to prove its allegations against the former management team of Autonomy. He said HP “selectively leaked documents and information to the international media, frequently using material taken out of context to create false impressions and smear our reputations.”
Evidence shows Autonomy was open and transparent
According to Mike Lynch, all evidence in the public domain shows that Autonomy was fully open and transparent with Hewlett-Packard Company (NYSE:HPQ) as noted by a report from Financial Times published on February 17, 2014.
Based on the audit papers, accounting documents and internal e-mails, the Financial Times noted that Hewlett-Packard Company (NYSE:HPQ) was aware of the hardware sales of Autonomy from the period when the deal was closed until May 2012. The sales of low margin hardware were the center of the allegations wherein HP said those were misrepresented as software. However, some of the deals claimed by HP as fraudulent were signed off by some of its executives including CEO Meg Whitman.
Mike Lynch urged the shareholders of Hewlett-Packard Company (NYSE:HPQ) to help put things right. “Meg Whitman has made incendiary and defamatory accusations on behalf of her company. She should now present the detailed evidence that justifies those allegations and a $5.5bn write-down in the value of your company,” he said.
“You and I have a shared ambition to see this situation resolved as soon as possible. I hope your questions today can bring us nearer to that resolution,” added Mike Lynch.