Ex-Autonomy boss waiting on HP reply over revenue accusations

Mike Lynch says he has not been contacted by HP after it alleged it had discovered improprieties following their takeover

Former Autonomy boss Mike Lynch says that Hewlett-Packard has still not contacted him or his lawyers over its accusations made last November that the company's revenues were inflated.

"We have heard nothing," Lynch said at the London Web Summit. "We haven't heard from HP. The only thing that has happened is that the FRC [Financial Reporting Council], which checks auditors' performance, has said it is going to look at how the audits of the company were done."

He added: "We would like to hear from HP, and I have demanded to see what they have. We're in the bizarre situation where someone can arrange a series of interviews proclaiming something and then isn't prepare to back it up. We've heard absolutely nothing. And this [lack of communication] may turn into a big issue."

HP's chief executive, Meg Whitman, claimed in November that HP had discovered "serious accounting improprieties, disclosure failures and outright misrepresentations" in Autonomy's business after buying it in 2011 for more than $10bn (£6.6bn), and too a charge of $8.8bn against the acquisition.

Lynch has denied Whitman's accusations repeatedly and challenged her and HP's board to produce evidence to support their claim. "Deloitte [which audited Autonomy] says that they're happy with their work. Maybe if somebody had asked us we could have told them."

In a statement, HP said: "HP's position is the same as it has been from the beginning. We have handed over our information of serious misrepresentations in Autonomy's accounting to the proper authorities, namely the SEC and the Department of Justice and in the UK the SFO. We continue to c-ooperate and provide requested information to the relevant authorities on an ongoing basis."

Lynch said the problems at Autonomy after its takeover had come because the "assets" of his software company – its people – had become disillusioned with working inside a much bigger organisation, where the strategy under which the company was bought – to focus on software and services – was reversed to emphasise hardware such as PCs and printers again.

"The average age of our programmers was lower than the average at HP, and ours were used to getting things done without bureaucracy and process. HP seemed to have excessive amounts of those. Putting those two together was always going to be very difficult."

Lynch insisted that he was happy with the original vision of the takeover, by HP's then-chief executive Leo Apotheker. He said that he had had no choice when it came to selling the company: "The reality of running a public company in the UK is that you have no control over whether the company gets sold. There are no poison pill defences like you see in the US. If somebody offers a premium over the share price, and London was used to seeing only 20% to 30% premiums, and then you have a technology company [Autonomy] which gets an offer at a 60% premium to the stock price."

He insisted that Apotheker – subsequently ousted in a boardroom coup – had a promising vision for the future evolution of HP, which had been focused until he took over on its PC and printer businesses. Apotheker had explored selling off the PC business, and refocusing HP on software and services.

"He had a vision about the rise of human-friendly information over the traditional form, of databases with rows and columns," said Lynch. "Since the 1960s, software has been about databases and 1s and 0s, but software isn't about that in this new world, where there's an explosion of smartphones and audio and video. A database can't understand that stuff." Autonomy's software was designed to cope and sort that, he suggested.

He said that the change of strategy executed after Apotheker's departure – retaining the PC business – meant the company "went from a strategy where they were divesting assets, to putting hardware front and centre. So the trajectory was no longer the same."

Lynch is now aiming to fund new "fundamental technology" startups in the UK with Invoke Capital, his new company, using funding from his shareholding in Autonomy.

He said stories that he had celebrated selling Autonomy by going on a three-day drinking spree were completely untrue: "I was on the phone, talking to journalists," he said.


Charles Arthur

The GuardianTramp

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