Tag: Autonomy

Autonomy man takes HP to court

Meg WhitmanThe ex-CEO of Autonomy said today he is going to sue Hewlett Packard for $150 million.

HP bought Mike Lynch’s company for $11 billion in 2011, and then accused him later of mismanaging the company and wrote off billions of Autonomy’s value.

HP is suing Lynch for damages over $5 billion and alleges that Autonomy had presented the appearance of a high power software company when it wasn’t.

But Lynch claimed that HP made allegations that were damaging and misleading and has due diligence documents made at the time.

He believes that HP acted incompetently over the acquisition and that caused the relationship to fall apart.

He wants to make HP’s CEO Meg Whitman appear in court.

HP pays off shareholder over Autonomy deal

HP logoHP has written a $100 million settlement cheque to one of its shareholders which has more letters in its name than an IBM job title.

The maker of expensive printer ink paid off PGGM Vermogensbeheer B.V to make it stop suing it over its Autonomy buy out.

HP bought the British software maker in 2011 for $11.7 billion. The following year, HP announced the $8.8 million impairment charge as a result of what it called “accounting improprieties, misrepresentations and disclosure failures” in Autonomy’s financial statements. HP shareholders filed suit that same year.

However an investigation by the UK’s Serious Fraud Office was dropped earlier this year, but HP went on nevertheless to sue Mike Lynch and Sushovan Hussain, Autonomy’s former CEO and CFO, for $5 billion.

We should point out that Lynch and everyone to do with Autonomy deny wrong doing and claim that the mess was caused by HP mis-management.

Officially HP thinks that PGGM Vermogensbeheer B.V’s case had no merit but it was a good idea for HP and its shareholders to resolve settle the case as further litigation would be burdensome and protracted.”

Under the terms of the settlement, HP’s insurance will pay $100 million to a settlement fund that will be used to compensate shareholders who purchased HP shares between Aug. 19, 2011, and Nov. 20, 2012.

No individual is contributing to the settlement, which remains subject to court approval, HP said.

HP forms Lynch mob

The maker of expensive printer ink, HP, is whipping together a mob to go for the former owner of British software company Autonomy.

The company has settled litigation over its troubled $11.1 billion acquisition of Autonomy and is now going to go after Michael Lynch, its former chief financial officer Sushovan Hussain, and potentially others related to Autonomy.

Part of the agreement with the shareholders is that their lawyers will assist HP in pursuing claims against Automony.

It is not clear what HP sort of attack the combined armies of lawyers will be using. It will probably be something like Lynch failed to tell HP that his company was not making any serious money. HP said it has evidence showing how Autonomy “created the illusion” that it was a high growth company.

HP took an $8.8 billion impairment charge in November 2012 for its purchase of Autonomy only just over a year earlier, with more than $5 billion of that linked to what HP said at the time were “serious accounting improprieties, misrepresentation and disclosure failures”.

Sources close to an HP investigation into the matter say that the technology giant believes that Autonomy’s results and prospects were made to look much better than they were.

This is something Lynch has consistently denied. He said HP is blaming him for its own failure to manage Autonomy after the acquisition.

“This had the effect of misleading investors and HP”, it said in a statement.

Former HP chief executive Leo Apotheker, the architect of the Autonomy deal who was ousted in September 2011 just weeks after it was announced, said he believed the conclusions of a special committee of HP board members that has reviewed the shareholder lawsuit would be a “welcome measure of vindication”. 

HP knew all about Autonomy losses

A bombshell has dropped on HP’s claims that it knew nothing about Autonomy’s accounting practices when it bought the outfit.

The Financial Times  has found emails from HP which indicate that senior executives were aware of Autonomy Corp’s accounting practices months before a whistleblower flagged them, prompting HP to write down Autonomy.

The maker of expensive printer ink has said it was a victim for having paid $11.1 billion to buy Autonomy in 2011. It took a writedown of $8.8 billion in November 2012, accusing Autonomy officials of accounting fraud.

HP apparently knew of Autonomy’s practice of selling hardware to clients at a loss because it was well documented by auditors and a report was provided to HP after it bought the British software maker.

HP executives were included in communications about Autonomy’s hardware sales before the whistle-blower brought the transactions to light, FT said.

In an October 2011 email that Chief Executive Meg Whitman was copied on, Autonomy cited difficulties it was having in selling HP hardware.

HP claims that while it eventually learned about the hardware sales, it knew nothing of the accounting improprieties until the whistleblower came forward. 

HP asks for more Autonomy time

The maker of jolly expensive printer ink which is more expensive than gold, also known as HP, has begged a court for more time to work out what it should do about the Autonomy alleged fraud case.

HP is being sued by shareholders who are furious over its $8.8 billion writedown for buying British software company Autonomy.

It has asked the court for six more weeks before deciding what to do. US District Judge Charles Breyer in San Francisco last September 6 gave Hewlett-Packard until Friday to vote on recommendations by a committee of independent directors.

The committee was to advise whether HP should try to have claims against various officers and directors dismissed, or join in the claims in a bid to recoup its losses.

HP said its board has reviewed the recommendations and “made decisions with respect to the actions that it deems to be in the best interests of the company and its shareholders”.

However, it has agreed with the plaintiffs’ lawyers to keep the lawsuit on hold until February 28, and discuss the board’s recommendations with them between February 18 and 20.

HP has insisted that it was the victim for having paid $11.1 billion to buy Autonomy in 2011 and has accused Autonomy officials including former Chief Executive Mike Lynch of accounting fraud.

Lynch has denied the allegations.

In November, shareholders could pursue a separate lawsuit accusing Hewlett-Packard and CEO Meg Whitman of failing to reveal soon enough in 2012 that the company may have overpaid for Autonomy or suspected fraud.

So far Judge Breyer has let Whitman’s predecessor Leo Apotheker, who engineered the Autonomy purchase, off the hook. 

HP sued for a billion over Autonomy buy

The maker of jolly expensive printer ink, HP, is facing a $1 billion lawsuit from shareholders over its Autonomy acquisition.

Shareholders are rushing to court to claim that the HP board ignored  evidence on the ‘vastly overvalued’ buy.

It is possible that the case could have huge implications for HP.

HP chief executive Meg Whitman was at the time a member of the board that approved the Autonomy purchase. Her predecessor, Léo Apotheker, the company’s former chairman Ray Lane and Autonomy founder Mike Lynch are among eight defendants named in the class action suit, filed at California’s San Francisco district court.

According to court documents, HP tried to pull out of its $11bn takeover of British software firm Autonomy before the deal closed.

Whitman and Lane ignored damaging evidence from whistleblowers and allegedly hid their full concerns about the Autonomy deal.

The court documents, seen by the Guardianshow HP’s board of directors were too tired from infighting to effectively oversee the acquisition of Autonomy.

If you believe the shareholders, Apotheker was egged on by self-interested auditors, Wall Street bankers and other investment advisers who wanted to collect their fees for the deal.

Lynch has been accused of exaggerating his company’s performance to investors and “hoping to cash out of Autonomy before it collapsed under the weight of its own fraud”.

Before the sale went through, HP realised that this was the case and Whitman, who had been a member of the board that approved the purchase, had replaced Apotheker as chief executive.

Lane asked HP’s financial advisers, Barclays and Perella Weinberg, to check whether his company could back out of the deal.

Since the board had been aware of accusations that Autonomy’s management were exaggerating their company’s performance before the offer was made, the UK Takeover Panel would reject any plea by HP to walk away, Lane was reportedly told.

HP decided that it was better to clean up the HP/Autonomy debacle internally than face embarrassing failed foreign litigation with Autonomy.

HP was only forced into a full disclosure in May 2012, when a senior Autonomy executive blew the whistle on serious accounting improprieties with HP’s top lawyer John Schultz, the shareholders claim.

The court heard that HP had four whistleblowers who warned them of what was happening. Three of whom came forward before the deal was completed.

There was UK financial analyst Paul Morland who wrote to HP’s investor relations department in September 2011 to “tell them they were making a big mistake”. Another whistleblower was a former Autonomy finance executive who told the British company’s auditor Deloitte of “improper accounting”, and then there was an author of a widely circulated email which questioned Autonomy’s claims about the popularity of its flagship software.

The suit is led by the Dutch pension fund PGGM Vermogensbeheer, which last year was part of a group of investors that sued Bank of America for $2.4 billion over its purchase of Merrill Lynch, and believes it lost $35 million on its HP investments. 

UK police to investigate Autonomy

The maker of expensive printer ink, HP, has told the BBC that the UK’s serious fraud office is investigating the antics of Autonomy.

HP had to write down the value of Automony this year, which was accused of over-valuing itself by about $5 billion. HP wrote a check for nearly $10 billion for the outfit.

Now the UK’s Serious Fraud Office (SFO) has joined the US Department of Justice and the UK accounting regulator in questioning Automony.

HP said that it had provided information to the UK Serious Fraud Office, the US Department of Justice and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP’s acquisition of Autonomy.

A spokesperson for the SFO confirmed that “allegations have been made to the SFO about the circumstances of the sale in 2011 of Autonomy to Hewlett Packard”.

It is the first time that anyone has confirmed that the Serious Fraud Office is involved, although it has been hinted at before.

However, the SFO has pointed out that just opening a criminal investigation does not mean that anyone is guilty of a crime or that it thinks that one has been committed.

Ironically the SFO has had to deal with reports that it uses an Autonomy software product, Introspect, which is a document management tool.

Apparently it is working to make sure that there is no conflict of interest. This might mean that it has to remove the software from its own servers before it starts investigating.

However, the confirmation that the SFO is on board will help HP as it holds its annual meeting in California. HP has been trying to claim that it was duped by criminal activity by Autonomy, and its CEO Mike Lynch rather than just being incompetent.

Autonomy’s Mike Lynch has insisted he did nothing illegal. 

HP waters down Autonomy allegations

The former boss of Autonomy, Mike Lynch claims that HP has failed to provide a detailed calculation of the $8.8 billion write-down in the value of his old company.

Last month, HP stunned investors when it announced it was taking an $8.8 billion charge against the $11.1 billion it had paid for Autonomy it had bought from Lynch a year before. HP claimed that $5 billion of that write-off stemmed from “accounting improprieties, disclosure failures and misrepresentations.”

Lynch told the Guardian that the maker of jolly expensive printer ink is “watering down” the allegations against him. So far he had also not heard from the US Department of Justice, which HP had revealed had opened an investigation into the dispute last month.

Lynch said that the fact that HP had been unable to be specific about its write downs, it amounted to a “material change” in the allegations made.

Neither he nor other former executive directors of Autonomy had contact from any regulatory authority on either side of the Atlantic.

What appears to be happening is that the investigation into Autonomy appeared to be moving backwards and he thinks it is starting to look like there is little proof of what HP believes.

Autonomy was bought by former HP CEO Léo Apotheker as part of his moves to turn HP into a bigger version of SAP. However in SAP the idea was always to sell expensive management software which no-one really knew what it did. In the case of Autonomy, neither did Apotheker. While few thought Autonomy was worth what Apotheker paid for it, the write down was a shock. 

Shareholder accuses HP of lying about Autonomy write-down

An HP shareholder has accused it of lying about the reasons for the $8.8 billion write-down following its Autonomy buy in a lawsuit filed in a US court.

The lawsuit, filed by Stanley Morrical, who owns 1,200 shares in the computing giant, claims that promises around an integrated platform using Autonomy were not delivered.

The lawsuit states that a Next Generation Information IDOL 10 product was promised when the firm paid $11.7 billion for the British software, combining software with HP’s Vertica technology.  Morrical says that such a product has not yet been delivered.

The case, filed in a San Jose District Court, claims that it is this lack of product development which is to blame for the write-down, rather than the fraudulent accounting practices that HP has alleged.

“The integrated Next Generation Information Platform that HP claimed existed did not exist in the form that was announced,” the court filing claims, “it was a fraud – not accounting fraud as stated by HP – but a more fundamental and foundational fraud because HP did not and does not have the revolutionary product it promised the public, its customers and its shareholders.”

Morrical is also alleging that the board of directors were fully aware of Autonomy’s inability to deliver on “next generation” products, claiming that “HP’s officers and directors know that they wasted $11.7 billion worth of HP’s corporate cash to buy a company with an outdated product with multiple competitors.”

HP has claimed that of the $8.8 billion write-down, around $5 billion has been down to ‘accounting improprieties’ at Autonomy prior to the sale of the company.   This includes ‘channel stuffing’, with allegations that software licences, which were sold to resellers but not to customers, were included in its sales.

Former Autonomy boss Mike Lynch has denied the allegations, countering that the board of directors should have been fully aware of the financial well being of the company.  

Leo Apotheker, HP CEO at the time of the Autonomy purchase, also weighed in to claim that the blame was with the board of directors.

Other investors also filed lawsuits last month after the write-off caused HP’s shares to plummet.