max temp: 13°C

min temp: 12°C

ESTD 1874 Search

National: Hewlett-Packard accuses UK firm over £5.5billion hit

15:51 20 November 2012

Mike Lynch

Mike Lynch


Hewlett-Packard took an 8.8 billion US dollar (£5.5 billion) hit today as it accused former staff at a UK software company it bought last year of cooking the books.

HP acquired Cambridge-based Autonomy in a £7.1 billion deal that saw its founder Dr Mike Lynch, from Suffolk, pocket around £500 million.

The American firm alleges that former members of Autonomy’s management fiddled accounts in a bid to “mislead investors and potential buyers” and has referred the matter to the Serious Fraud Office (SFO).

It has been reported this afternoon that Dr Lynch’s spokeswoman said he “flatly rejects” the allegations, describing them as “false”.

HP wrote off 8.8 billion US dollars in its fourth quarter earnings, with the majority linked to “serious accounting improprieties, misrepresentation and disclosure failures” discovered by an internal investigation.

The inquiry, run by accountancy firm PwC, was launched after a whistleblower at Autonomy approached HP with the allegations.

Autonomy was considered one of the UK’s biggest technology success stories, having pioneered software that helps companies to search data, particularly in cases involving compliance and legal issues. Clients include Procter & Gamble, Nestle and Shell.

In a statement, HP said it was “extremely disappointed” by the findings of its internal investigation.

It added that the actions of former staff “appear to have been a wilful effort to mislead investors and potential buyers, and severely impacted HP management’s ability to fairly value Autonomy at the time of the deal”.

But it went on: “We remain 100% committed to Autonomy and its industry-leading technology.”

HP said more than 5 billion US dollars (£3.1 billion) of the impairment charge was linked to the allegations of account-fiddling, while the remainder is connected to the recent trading value of HP stock.

HP said it was approached by a senior member of Autonomy’s leadership team following the departure of Dr Lynch in May this year.

After the PwC investigation, HP now believes that Autonomy was “substantially overvalued” at the time of its acquisition due to the mis-statement of Autonomy’s financial performance.

As well as the SFO, HP has referred the matter to the US Securities and Exchange Commission’s Enforcement Division and is preparing to seek compensation against various parties.

The impairment charge has pushed HP to a 6.9 billion US dollar (£4.3 billion) loss in the fourth quarter, compared with a 200 million US dollar (£125 million) profit in the same quarter last year.

Search hundreds of local jobs at Jobs24


BT has seen profits rise in the last quarter.

BT has reported better than expected earnings for the second quarter as the telecoms giant continues to attract customers following its acquisition of EE.

Felixstowe town centre looking busy and vibrant.

Two Suffolk communities have been praised for revitalising their high street “as a unique place for living, working and shopping”.

Lloyds has put aside £1bn for PPI compensation.

Lloyds Banking Group has set aside another £1bn to meet compensation claims for the mis-selling of payment protection insurance (PPI).

Daryl Johnson, General Manager at Bannatyne Bury St Edmunds, Anthony Elliott, Operations Director at Bannatyne Group, and Karen Wilkinson, Group Head of Spa for Bannatyne Group.

A Bury St Edmunds-based spa is celebrating a £375,000 facelift.

Solar panels at a solar farm. Half a million solar panels were installed every day last year, as renewables overtook coal to become the largest source of power capacity worldwide.

Half a million solar panels were installed every day last year, as renewables overtook coal to become the largest source of power worldwide.


Show Job Lists

Most read

Most commented

Topic pages


Newsletter Sign Up

Sign up to the following newsletters:

MyDate24 MyPhotos24