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Hewlett-Packard (NYSE:HPQ) is faced with an $8.8 billion write-down after $3.8 billion in charges due to recent tradings and $5 billion H-P blames on Autonomy, the software company it acquired just over a year ago for $10.7 billion. H-P claims Autonomy had vastly misrepresented its value prior to the acquisition, and H-P will be filing for civil and criminal suits to recover what it can.
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In the face of such a massive claim, Autonomy founder Mike Lynch addressed H-P’s board of directors with an open letter, asking for clarification on numerous points and all the information that H-P submitted to the U.S. Securities and Exchange Commission and to the U.K. Serious Fraud Office. In Lynch’s letter, he expresses doubts over H-P waiting over a year to mention anything about Autonomy’s misrepresentation, and he also questions H-P’s due diligence prior to acquisition and management of the company after acquisition.
Lynch’s stance is naturally defensive, wanting to be sure his company hadn’t been acquired, run to the ground, and then had the buck passed to the previous management — not that Autonomy has been run to the ground, but H-P thinks it’s a bit closer to the ground than when they bought it.
H-P has responded to Lynch only so far as to say they will see him in court and look forward to it.
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