HP seeks fraud probe at Autonomy Corp.
11/20/2012 2:10:00 PM
Hewlett-Packard called Tuesday for a probe into "willful" financial misstatements by Autonomy Corporation, a British enterprise software firm bought by HP last year for over $10 billion.
"HP has referred this matter to the US Securities and Exchange Commission's Enforcement Division and the UK's Serious Fraud Office for civil and criminal investigation," the US tech giant said in a statement after taking a big writedown.
It reported a $6.9 billion quarterly loss, hit by a massive $8.8 billion writedown, mostly due to "accounting improprieties" at the British firm.
"HP is extremely disappointed to find that some former members of Autonomy's management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy's acquisition by HP," said the US company.
"These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management's ability to fairly value Autonomy at the time of the deal. We remain 100 percent committed to Autonomy and its industry-leading technology."
California-based HP said it launched an internal investigation "after a senior member of Autonomy's leadership team came forward... alleging that there had been a series of questionable accounting and business practices at Autonomy prior to the acquisition by HP."
HP initiated its own investigation including a forensic review by PricewaterhouseCoopers.
"As a result of that investigation, HP now believes that Autonomy was substantially overvalued at the time of its acquisition due to the misstatement of Autonomy's financial performance, including its revenue, core growth rate and gross margins, and the misrepresentation of its business mix," the statement said.
The US computer giant said the results closed the fiscal year with a $12.65 billion loss, sending its share price tumbling some nine percent in pre-market trade.