Hewlett-Packard's stock is at a 10-year low this morning, after the company announced it was misled when it acquired the British software firm Autonomy last year. That acquisition forced the company to take an $8.8 billion hit to its bottom line last quarter.
Yesterday, Marketplace host Kai Ryssdal spoke with Hewlett-Packard's chief executive Meg Whitman, and asked her if she felt the company had been lied to.
Whitman: You know, certainly there were very serious accounting improprieties, disclosure failures and outright misrepresentation on the part of some Autonomy employees that was designed to inflate the underlying financial metrics of their company when they were a publicly held company before HP bought them. And as you know, we've turned this matter over to the SEC as well as the Serious Fraud Office in the U.K., and I'll leave it to them to characterize exactly what went on here.
Ryssdal: You were on the board of HP at the time -- you were not the CEO -- but you were on the board. Where does responsibility lie within HP for this -- one can only call it, a disaster?
Whitman: So listen, HP's board is very disappointed. We feel terrible about this. I'm sorry I voted for this acquisition. But what I will tell you is we relied on audited financial statements by Deloitte, which is not exactly "brand X auditor." Right? It's a very well-known company and who would have dreamed that the financial reports did not have integrity as we expected?
Mike Lynch, the founder and former head of UK-based Autonomy, is also speaking out. He flatly denies the charge that he and his colleagues lied about the company's finances. Instead, he says Hewlett-Packard is to blame.
"It's managed the company very badly," Lynch said. "It lost around half of the staff before I left; the whole of the management team. And the value of that company has now fallen; they've been forced to write it off."
Lynch sees this blame game is a way for HP to distract investors and the general public from their own internal problems.
But many British analysts say this isn't the first time a giant company has snapped up a smaller, cutting-edge company with the goal of keeping up. But, in this case, the financials of Autonomy -- and exactly how it made as much money as it claimed -- remain unclear.