Autonomy founder says HP allegations don't add up
By Anjuli Davies
LONDON (Reuters) - Mike Lynch, mathematics whiz and former boss of Autonomy, said he can't see how accusations leveled by Hewlett-Packard Co of dodgy accounting add up to a $5 billion writedown on the software business he sold them last year.
HP said on Tuesday it would write $8.8 billion off its $11.1 billion purchase of the British company, $5 billion of it due to "serious accounting improprieties" and "a wilful effort by Autonomy to mislead shareholders" revealed by a whistleblower and a forensic audit by accountants PricewaterhouseCoopers.
It has alerted regulators on both sides of the Atlantic.
Mike Lynch says he has yet to hire a lawyer and has not spoken to either HP or any investigators, but he has sat down with past accounts of the firm he founded in an attempt to answer the accusations laid out in HP's public statements.
HP's general counsel John Schultz claimed Autonomy created more than $200 million in revenue over a two-year period from 2009, which would amount to 12.5 percent of Autonomy's $1.6 billion in revenues in their annual accounts for 2009 and 2010.
While denying the allegations as "utterly wrong", Lynch said there were three areas where accounting rules gave scope for differences of interpretation.
Accounting rule setters have been working on plans for a decade for common global accounting rules so regulators and investors can compare company accounts, but until that task is complete, there are competing standards that can produce different results for companies doing broadly the same thing.
The International Accounting Standards Board (IASB) has devised International Financial Reporting Standards (IFRS), used in more than 100 countries, and the basis for Autonomy's accounts prior to HP's acquisition. Continued...