HP Mired In Messy Allegations
Hewlett Packard says it is doing an "intense internal investigation" into its disastrous acquisition of the British software company Autonomy. HP claims it was deceived by Autonomy about the health of the firm's finances. The deal is causing HP to take an $8.8 billion charge against earnings. Autonomy's former CEO has challenged HP to spell out any improprieties it's found.
RENEE MONTAGNE, HOST:
For decades, Hewlett Packard was a Silicon Valley icon. Today, the company is mired in messy allegations about accounting irregularities at a software firm it bought called Autonomy.
From Silicon Valley, NPR's Steve Henn reports Autonomy allegedly inflated its earnings prior to that sale.
STEVE HENN, BYLINE: Last week, HP's CEO Meg Whitman told investors the company was writing off more than $8 billion in losses, largely because of what happened at Autonomy.
DAN MAHONEY: The magnitude of the write-down was quite large, but I was not surprised that there were accounting issues at Autonomy at all, just given the history.
HENN: Dan Mahoney at CFRA is kind of an investigative accountant. He digs into the records of public companies looking for signs of accounting fraud. Investors pay him for warnings of things that might go bad. Autonomy had been on his firm's accounting watch list for years.
MAHONEY: The first report we ever published on them was in February of 2001.
HENN: Over the next decade CFRA issued more a dozen warnings.
MAHONEY: Now, we don't write reports on companies that we think have great accounting. We only write reports on companies were we feel there are concerns.
HENN: Yesterday, Mike Lynch, Autonomy's founder, responded to allegations of impropriety in a public letter to HP's board. Lynch defended his accounting. He challenged HP's managers to share what they've found, and suggested HP's own mismanagement was to blame. HP says the matter is now in the hands of the government authorities.
Steve Henn, NPR News, Silicon Valley. Transcript provided by NPR, Copyright NPR.