The U.S. Department of Justice last month launched an investigation into alleged accounting improprieties surrounding Hewlett-Packard's acquisition of Autonomy, HP revealed Thursday in its annual 10-K filing with the Securities and Exchange Commission.
HP has also provided information to the SEC and the U.K. Serious Fraud Office about what it described in the 10-K as "accounting improprieties, disclosure failures and misrepresentations" at Autonomy. HP, which paid $11.1 billion to acquire Autonomy in August of 2011, is accusing Autonomy CEO Mike Lynch and his executive team of cooking the books prior to the deal in order to fetch a higher price.
In the 10-K, HP also listed details of 10 separate shareholder lawsuits it is currently facing that stem from last month's $8.8 write-down from Autonomy and the $8 billion write-down from EDS it reported in August.
[Related: Shareholder Suit Targets Deloitte, KPMG In HP-Autonomy Accounting Scandal]
Lynch and former HP CEO Leo Apotheker are each named as defendants in three of the shareholder lawsuits, while the other four are class actions. HP CEO Meg Whitman said in last month's fourth-quarter earnings call that Apotheker and former Chief Strategy Officer Shane Robison were the two main drivers of the Autonomy deal within HP.
HP is alleging that $5 billion of the Autonomy write-down is tied to improper accounting. Lynch, in a Thursday post to the blog he recently created to rebut HP's allegations, said HP's 10-K filing doesn't include sufficient detail about how it arrived at this figure. Lynch also pointed to a "material change in HP's allegations" that he claims is further clouding the issue.
"It is now less clear how much of the $5 billion write down is in fact being attributed to the alleged accounting issues, and how much to other changes in business performance and earnings projections," Lynch said in the Thursday blog post.
HP also revealed in the 10-K that it took a $2.1 billion charge from the corporate restructuring plan it unveiled earlier this year, which will include the shedding of nearly 30,000 jobs by the end of 2014. In fiscal 2013, HP will continue implementing the cost reduction and operational streamlining plans it began this year, according to the 10-K.
Whitman has said on numerous occasions that HP needs to get its costs in line with revenue, improve internal tracking systems and boost R&D spending to get the innovation engine going. In the 10-K, HP also spoke of a need to "rebuild our business relationships with our channel partners," a passing reference to what could be construed as a promising development for the beleaguered HP channel.
PUBLISHED DEC. 28, 2012
