An executive vilified by Hewlett-Packard Co (HP) on allegations of an accounting ruse is escalating his counter-attack on the company accusing him.
In a letter to HP’s board released on Tuesday, former Autonomy CEO Mike Lynch fiercely defended his integrity. He also questions whether HP is using the charges of financial shenanigans to cover up damage caused by its own ineptitude.
HP fired back with a statement that predicted its findings of misconduct will be proven in anticipated legal proceedings about the dispute.
Lynch’s missive represented his most extensive remarks since HP accused him last week of deceiving the company about the growth of Autonomy, a British business software maker that HP bought for US$10 billion last year. He had previously denied HP’s accusations in interviews with various news organizations.
HP absorbed an US$8.8 billion charge to reflect Autonomy is not worth what the company paid. About US$5 billion of that charge stemmed from improper accounting, according to HP.
“Can HP really state that no part of the $5 billion write down was, or should be, attributed to HP’s operational and financial mismanagement of Autonomy since the acquisition?” Lynch said in his letter.
He demanded that HP’s board provide more specifics about how it arrived at its calculations.
The Autonomy mess has deepened a steep decline in HP’s stock price, which has cut the Palo Alto, California, company’s market value in half since the beginning of the year. HP had already been struggling because its personal computer and printer businesses have been faltering as more people buy smartphones and tablet computers. HP’s stock fell US$0.38 on Tuesday to close at US$12.36.
HP CEO Meg Whitman said last week that she fired Lynch in May because Autonomy wasn’t hitting its financial targets. After Lynch departed, Whitman said a whistleblower triggered an extensive investigation that culminated in HP’s conclusion that it had been duped before it agreed to buy the British company. HP said it has handed its findings over to securities regulators in the US and the UK, as well as the US Department of Justice.
Even if authorities don’t file charges, HP said it plans to take legal action against the people it believes manipulated Autonomy’s finances.
Meanwhile, HP faces at least one shareholder lawsuit. On Monday, a stockholder who owns 200 shares accused HP of concealing problems with Autonomy and other acquisition.