HP Says it was Duped by Autonomy Acquisition

by Dan Holden | November 21, 2012

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Hewlett-Packard yesterday alleged accounting improprieties at its Autonomy Corp. business unit, acquired last year for some $10 billion, spurring inquiries from the US Securities and Exchange Commission and the FBI.

HP management accused Autonomy’s former managers of a broad range of financial falsehoods including improperly categorized hardware. The accounting missteps alone resulted in a $5 billion write-down, with another $3.8 billion write-down related to the fiasco’s impact on share value and future financial projections.

H-P first reported the alleged problems to the SEC, which then requested assistance from the FBI, according to a Bloomberg report.

HP first announced the acquisition of Autonomy, a European infrastructure software company, in mid-August 2011.  At the time, the acquisition was one of HP’s largest deals to date.

According to reports, Autonomy develops enterprise software that powers cross-enterprise search, customer interaction solutions, information governance, end-to-end eDiscovery, records management, archiving, business process management, web content management, web optimization, rich media management and video and audio analysis. The company’s software allows enterprises to provide insight and structure to electronic data, including unstructured information, such as text, email, web pages, voice, or video.

Prior to the acquisition, Autonomy was traded on the London Stock Exchange. The company was the subject of a previous bidding war between Microsoft and Oracle in 2010 and had been evaluating a US listing prior to the acquisition.  In preparation for a major US push, Autonomy earlier in 2011 had purchased assets from Iron Mountain for $380 million.

At the time of the acquisition, Léo Apotheker, then HP president and chief executive gave glowing reviews of the company, saying in a statement that “Autonomy presents an opportunity to accelerate our strategic vision to decisively and profitably lead a large and growing space…Together with Autonomy, we plan to reinvent how both unstructured and structured data is processed, analyzed, optimized, automated and protected.

“Autonomy is a highly profitable and globally respected software company, with a well-regarded management team and talented, dedicated employees,” Apotheker continued. “We look forward to partnering with a company who shares our commitment to solving customer problems by creating smart, cutting-edge products and solutions.”

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