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Autonomy fiasco hits HP hard

Published 21/11/2012

Computer giant Hewlett-Packard has accused a British company it bought for $10bn (£6.2bn) last year of lying about its finances, resulting in a massive write-down of the value of the business.

Shares dropped toward a 10-year low after the announcement by chief executive Meg Whitman.

She avoided calling it a fraud, but said there were "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc."

HP is taking an $8.8bn charge in its latest quarter, largely to align the accounting value of Autonomy with its real value. It said most of that charge was due to the fictional bookkeeping at Autonomy.

The revelation is another blow for HP, which is struggling to reinvent itself as PC and printer sales shrink.

Ms Whitman said Autonomy's financial illusion started to unravel after founder Mike Lynch left on May 23. A senior Autonomy executive then volunteered information about the accounting shenanigans, prompting an internal investigation, she said.

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