Hewlett-Packard Tuesday said an extensive investigation has found that before HP acquired Autonomy the software company engaged in what HP called "improper transactions with certain value-added resellers to create the appearance of software licensing revenue at the end of each quarter." The HP statement came in response to a Financial Times article on the continuing controversy.
“While HP eventually learned that a portion of Autonomy's revenues were related to hardware sales, we knew nothing of the accounting improprieties, misrepresentations and disclosure failures related to such sales until after a senior Autonomy executive came forward and HP conducted an extensive investigation," said HP in a statement provided to CRN. "Our investigation has shown that Autonomy often resold generic hardware at a loss in the last few days of the quarter with the sole purpose of masking its real financial performance. In addition, Autonomy engaged in improper transactions with certain value-added resellers to create the appearance of software licensing revenue at the end of each quarter. In some instances, these transactions were used to accelerate revenue, and on numerous occasions, these were fabricated transactions with no real end-user.”
HP did not name the VARs that allegedly were involved in the accounting improprieties.
The latest back and forth on Autonomy, which was acquired by HP in October 2011 for $10.2 billion and was then the subject of an $8.8 billion write-down, comes just two weeks after HP reduced results at its Autonomy division for 2010. Citing accounting errors, HP, Palo Alto, Calif., reduced 2010 revenue at Autonomy by a whopping 54 percent. In addition, HP restated Autonomy's operating profit by 81 percent for the same period.
Mike Lynch, the Autonomy co-founder at the center of the accounting controversy, wrote on his AutonomyAccount.org blog that the Financial Times article shows that "HP and its senior management were well aware of Autonomy’s hardware sales and its legitimate practice of sometimes selling hardware as a loss leader."
PUBLISHED FEB. 18, 2014