The friction between HP and Autonomy – the UK company that it acquired in 2011 (Display Monitor Vol 18 No 33) have been well-documented. HP accused Autonomy of lying about its finances, more than a year after the acquisition (Display Monitor Vol 19 No 47), and has alleged that the former CEO and finance director – Mike Lynch and Sushovan Hussain, respectively – planned to inflate the value of the company through illicit accounting practices.
Lynch hit back at HP, claiming that the accounting practices Autonomy used were standard, and nothing was kept hidden. Now a due diligence report by KPMG, published in 2011, has been released to the public, appearing to agree with Lynch and Hussain. The report makes note how Autonomy tracked sell-in to resellers rather than end users, for example. It also warned that Autonomy’s growth rate would be lower if American accounting practices were applied.
HP maintained its former position. A spokesperson said, “Mike Lynch and Sushovan Hussain conducted a systematic and sustained scheme to make Autonomy look like a rapidly growing, pure software company whose performance was consistently in line with market expectations. It was a lie.
“HP had no knowledge of Lynch and Hussain’s contrived sales to value-added resellers and other improper transactions and accounting practices, all of which artificially inflated Autonomy’s reported revenues, misrepresented its rate of organic growth and overstated its gross and net profits”.