HP’s war of words with Lynch escalates

The war of words between Tipperary-born entrepreneur Mike Lynch and Hewlett Packard over the allegations of accounting irregularities at Mr Lynch’s former company, Autonomy, escalated in advance of the HP annual shareholder meeting yesterday.

In an open letter to HP shareholders, Mr Lynch accused HP of selectively leaking information and smearing him and his former management team without providing any evidence.

Following a massive $11.7bn (€8.65bn) purchase of Mr Lynch’s software firm Autonomy in 2011, HP accused Autonomy of overstating profits at one of its main British units by 81%. A year later HP wrote down the value of Autonomy by more than $8bn due to accounting irregularities.

Mr Lynch has hit back saying that HP has serious questions to answer and accusing the Silicone Valley computer giant of misleading its shareholders.

“I write to you to raise serious concerns about the way HP has conducted this affair, and to put forward a number of questions that HP management should answer. The evidence shows that HP is not just smearing us, but also misleading you, its shareholders. I ask you to help put things right.”

Mr Lynch accused HP of refusing to share any information with the former Autonomy management team, instead leaking certain documents to the media to paint Autonomy in a certain light.

The majority of the allegations centre on how Autonomy recorded hardware sales, with HP claiming that they uncovered serious accounting irregularities, and standing behind the claims following Mr Lynch’s letter.

HP issued a statement claiming it had “uncovered numerous accounting irregularities at Autonomy prior to its acquisition by HP.” HP reported the matter to civil and criminal regulators in the US and Britain.

“HP’s independent advisers carried out several valuation reports of Autonomy after the acquisition, which explicitly included Autonomy’s hardware sales and confirmed the value of the company at c$11bn? Does HP management deny this? Will they disclose these reports to shareholders?” Mr Lynch said.