Hewlett Packard CEO and President Meg Whitman attends the Allen & Co Media Conference in Sun Valley, Idaho July 12, 2012.
The fallout from Hewlett-Packard’s purchase of software company Autonomy, which has turned into a multi-billion dollar debacle, keeps getting worse. Last week, after a several-months-long investigation, H.P. announced an $8.8 billion write-down related to allegedly fraudulent accounting at Autonomy, which it purchased last year for more than $11 billion. H.P. said it had referred the matter to criminal and regulatory authorities in the U.S. and in Britain, where Autonomy was founded. The scandal has led to a bitter war of words between H.P. executives, including CEO Meg Whitman, and Autonomy founder Mike Lynch, who has demanded details of H.P.’s investigation. H.P. has responded by telling Lynch that it will see him in court.
Earlier this week, H.P. was slapped with a shareholder lawsuit in federal court in San Jose, California, which named Whitman, H.P.’s board of directors, and auditing firms Deloitte and KPMG as defendants. The lawsuit alleges that H.P. and its accountants were negligent in missing red flags related to the Autonomy purchase. The lawsuit, which is likely the first of many related to the scandal, charges that H.P.’s failure to perform adequate due diligence caused the company to significantly overpay for Autonomy, resulting in billions of dollars of damages to the company and its shareholders. Read the rest of this entry »