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Publish Date21/11/2012 11:48:05 AM
Hewlett-Packard said it has written down $8.8 billion of the value of the British software company it bought last year called Autonomy, because the company lied about its finances.
Many technology analysts criticized HP for purchasing the British firm that specializes in database search and other enterprise software technologies, as it was as too expensive.
HP paid $11 billion for Autonomy in October 2011 although the company had never made more than $1 billion in annual revenue.
But former CEO Leo Apotheker who was at HP`s helm when the Autonomy was bought saw opportunities with the firm, while current CEO Meg Whitman supported the deal.
HP found out it was the victim of a multibillion-dollar fraud after a senior manager at Autonomy came forward after Autonomy co-founder Mike Lynch left the company in May.
Former CEO of Autonomy, Mike Lynch, is believed to have falsified accounting records and used other tricks to make the company look more profitable.
So HP hired a third-party to review Autonomy`s finances, which confirmed that the company lied about its history and about its prospects.
Whitman, who forced Lynch out of Autonomy on May 23 because he was not living up to expectation, says Lynch willingly boosted the company`s figures.
Although Lynch denies the accusation, the case has been moved to the U.S. Securities and Exchange Commission and Britain`s Serious Fraud Office.
HP’s stocks lost nearly half of its value this year. The company’s stock fell nearly 12% on Tuesday settling at $11.71 at close.
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