Lynch of Autonomy Fires Back at HP

December 19, 2012

In writing off $8.8 billion of last year’s $11.1 billion purchase of Autonomy, Hewlett-Packard has leveled some serious accusations against the formerly independent British software company. Autonomy’s founder, Mike Lynch, speaks up and reviews British accounting rules for the HP management team in a pair of recent articles: in the Guardian’s piece, “Hewlett-Packards Autonomy Claims Inconceivable, says Mike Lynch,” and in “Autonomy Founder: Hewlett-Packard Having Trouble with Math” at Mercury News.

HP claims that a whopping $5 million of its write-off is due to “accounting improprieties” by Autonomy’s management team. These articles explain that at least some of the problems might be due to the different sets of accounting rules proscribed on each side of the Atlantic, and each article covers a few of the details. Mercury News’ Anjuli Davies writes:

“Accounting rule setters have been working on plans for a decade for common global accounting rules so regulators and investors can compare company accounts, but until that task is complete, there are competing standards that can produce different results for companies doing broadly the same thing.

The International Accounting Standards Board has devised International Financial Reporting Standards, used in more than 100 countries, and the basis for Autonomy’s accounts prior to HP’s acquisition.

But many U.S. companies such as HP use U.S. Generally Accepted Accounting Principles, which can differ from IFRS, notably in respect of software revenue recognition.”

So, is it just a big misunderstanding? Lynch doesn’t seem to think so; The Guardian’s Juliette Garside quotes him declaring:

“[HP has] had to do a very big writedown and they tried to blame it on the accounting but obviously something else is going on. People realise I’m certainly not going to be used as HP’s scapegoat when it’s got itself in a mess.”

Is Lynch speaking out of defensiveness or appropriate righteous indignation? Without a lot more details, it is hard to say. What is clear is that Lynch is not the sort to sit by while someone attempts to tarnish his, and his associates’, good names.

Cynthia Murrell, December 19, 2012

Sponsored by ArnoldIT.com, developer of Augmentext

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One Response to “Lynch of Autonomy Fires Back at HP”

  1. HP Autonomy Problem Larger than Accounting Snafus? : Stephen E. Arnold @ Beyond Search on January 11th, 2013 12:07 am

    […] would have paid off handsomely. Instead, not only did the tech titan level their startling accounting charges, they are focused on the wrong aspect of their asset. While HP seems intent on pursuing the voice […]