Article by By Evan Koblentz
http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202578977071
Hewlett-Packard Co. said Tuesday it will take an $8.8 billion write down related to its purchase of Autonomy PLC and alleged that Autonomy executives committed accounting fraud to inflate the company's value during the sale.
HP acquired the Cambridge, U.K.-based e-discovery and enterprise search stalwart in 2011 for $10.3 billion. In a statement, HP said that "the majority of this impairment charge, more than $5 billion, is linked to serious accounting improprieties, misrepresentation and disclosure failures discovered by an internal investigation by HP and forensic review into Autonomy's accounting practices."
"HP launched its internal investigation into these issues after a senior member of Autonomy's leadership team came forward, following the departure of Autonomy founder Mike Lynch, alleging that there had been a series of questionable accounting and business practices at Autonomy prior to the acquisition by HP. This individual provided numerous details about which HP previously had no knowledge or visibility," despite acquisition due diligence provided by Deloitte and KPMG, the statement explains.
The news took the overall technology world and specifically the e-discovery industry by storm. The impact for Autonomy's customers and partners could be felt for years to come. Autonomy held 17 percent of the e-discovery market in Am Law 100 law firms in 2011, but that fell to just 4 percent in 2012.
Technology research giant Gartner Inc., in its May 2012 e-discovery report, noted that Autonomy is known for good technology but has poor service.
Someone has alot of explaining to do.
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