The saga of the fight between Hewlett-Packard and Autonomy continued on stage today when Autonomy founder Mike Lynch repeated his allegation that HP has “never made” any formal representation to him or other former directors of the company regarding its controversial write-down of the acquisition.
On 18 August 2011 Hewlett Packard purchase Autonomy for $42.11 per share, around $10.2 billion. But while the transaction was unanimously approved by the boards of directors of both HP and Autonomy, there was a significant drop in revenue in the previous quarter. Mike Lynch left his role as CEO in May 2012.
Subsequent to that in November 2012 Hewlett-Packard announced that it was taking an $8.8 billion accounting charge, after claiming “serious accounting improprieties” and “outright misrepresentations” at Autonomy.
Lynch has always hit back with the counter-allegation that the problems were due to HP’s running of Autonomy, citing “internecine warfare” within the organization.
On stage at the London Web Summit today Lynch said he “has not heard from HP” and had only heard that the UK’s Financial Reporting Council (the UK’s independent regulator responsible for promoting corporate governance) were “going to check it.”
“On my site I’ve demanded HP back this up. It’s amazing that someone can arrange a whole series of interviews and not back it up. We knew nothing about it ahead of time,” he said. He added that accountants Deloitte have said they are happy with the transaction.
Lynch later went into the background behind the story, giving his version of events.
He said that give the normal multiple involved in transactions of this nature “If someone turns up and offer’s a premium over the share price, then they will sell the company. When a tech company comes along and it’s a 60% premium, that company gets sold.”
Speaking about the vision of the companies, Lynch said “The vision was a superb one.
He said HP’s CEO at the time, Leo Apotheker has “seen the rise of human information over the traditional database. The software industry since the 60s is the database.” He said the the database world of “rows and columns” was being profoundly affected by the rise of data from smartphones, multimedia and human information from social media.
But Lynch said that HP’s vision switched away from software back to hardware when Apotheker left. “They went from divesting assets to one where hardware was back in the centre – in a matter of weeks.”
It was this change that – at least Lynch maintains – lead to HP’s writing down of the acquisition.