Mike Lynch, who founded the British software company accused by Hewlett-Packard of falsifying finances, said that while he may have used some of the contested accounting and sales methods, they were all legal.
Bloomberg reports that one of the claims levelled by Hewlett-Packard is that Cambridge, England-based Autonomy mischaracterized some revenue from unprofitable hardware and improperly included it as 'license revenue'. The U.S. company said last week it recorded an $8.8bn writedown related to last year’s purchase of Autonomy and that more than $5bn of that impairment charge was the result of accounting practices.
'Essentially we would offer a discount on hardware, especially if people were buying software or a big long-term partner', Lynch said in an interview. 'A bank would buy software from us every other quarter, but they would also buy hardware from us'.
Lynch, who said he hasn’t yet hired a lawyer, has mounted a public campaign against his accusers, appearing on television and giving interviews rejecting Hewlett-Packard’s version of events, to defend his reputation as one of Europe’s most successful technology entrepreneurs. Hewlett-Packard this week called Autonomy’s practices a 'willful effort' to inflate financial metrics and mislead investors.
Hewlett-Packard said the misrepresentations caused them to value Autonomy incorrectly before the deal, which ultimately cost the Palo Alto, California-based company $11.1bn.
John Schultz, Hewlett-Packard’s general counsel, has said among those practices, which accounted for $200m in miscategorised or false revenue, was reselling Dell Inc. hardware and recording them as software revenue.
Hit the link below to access the complete Bloomberg article:
image: © Lisamarie Babik