Hewlett Packard Co rebuffed a request by former Autonomy Chief Executive
Mike Lynch to detail accusations of accounting fraud leveled against
the British software company and its former executives, and challenged
Lynch to submit to questions under penalty of perjury.
responding to an open letter that Lynch shot to HP's board on Tuesday,
asking for specifics of the U.S. company's allegations that Lynch and
former Autonomy executives inflated revenue and gross margins, which HP
said last week forced it to take an $8.8 billion writedown on Autonomy's
In his letter, Lynch again flatly rejected any accusations
of impropriety, and requested that HP's board share with him the same
documents it had submitted to U.S. and British regulators, including the
Securities and Exchange Commission and the Department of Justice.
exchange between HP, the world's largest computing company by revenue,
and the former chief of Autonomy, which HP acquired for upwards of $11
billion last year, escalated a row that erupted last week when HP
stunned investors by publicly accusing Lynch and other unnamed
executives of inflating financial results such as margins.
revelation again brought into question the competence of HP, which has
made a series of missteps in past years including failed acquisitions
and poor strategic decisions.
In Tuesday's letter, Lynch
challenged HP to elaborate on how it calculated the writedown,
especially $5 billion that the company has said was directly
attributable to accounting impropriety at Autonomy.
"Can HP really
state that no part of the $5 billion writedown was, or should be,
attributed to HP's operational and financial mismanagement of Autonomy
since the acquisition?" Lynch asked in the letter.
HP responded by
saying the matter was now in the hands of the SEC, the UK's Serious
Fraud Office and the Justice Department, and that it will defer to those
agencies on how to engage with Lynch. It also warned it will take legal
action against "parties involved" at the appropriate time.
Dr. Lynch is eager for a debate, we believe the legal process is the
correct method in which to bring out the facts and take action on behalf
of our shareholders," HP said in an emailed response.
setting, we look forward to hearing Dr. Lynch and other former Autonomy
employees answer questions under penalty of perjury."
HP's shares were down 1.5 percent at $12.55 in afternoon trade on Tuesday.
week's announcement came alongside the disclosure of a 6.7 percent
slide in quarterly revenue, and occurred just three months after the
company took a writedown of almost $11 billion on its EDS services
HP has for years relied on deal-making, acquiring
businesses ranging from EDS to Compaq to Palm, but has largely failed to
articulate a clear strategy or establish a strong position in growth
businesses like computer services or mobile computing.
© Thomson Reuters 2012