Hewlett-Packard Co. was sued by shareholders over its $8.8 billion writedown that the company said was partly related to falsified finances at Autonomy Corp., the British software maker it bought last year.
The complaint, filed today federal court in San Francisco, alleges that Hewlett-Packard issued false and misleading statements. The company concealed that it had gained control of Autonomy based on financial statements that were unreliable because of accounting manipulation, according to the complaint. Hewlett-Packard Chief Executive Officer Meg Whitman and the company’s former CEO, Leo Apotheker, are named as defendants, along with Chief Financial Officer Catherine Lesjak.
“At the time Hewlett-Packard agreed in principle to acquire Autonomy, defendants were looking to unwind the deal in light of the accounting irregularities that plagued Autonomy’s financial statements,” according to the complaint.
Hewlett-Packard said Nov. 20 that $5 billion of the total charge is due to accounting practices, which were disclosed by a senior executive at Autonomy. Hewlett-Packard said it referred the matter to U.S. and U.K. securities regulators and will also pursue civil litigation.
Hewlett-Packard said in a statement last week that some former members of Autonomy’s management team used accounting misrepresentations to inflate its underlying financial performance before the acquisition. Mike Lynch, who founded Autonomy, defended the company’s accounting practices in an interview last week.
Deloitte LLC said last week that it didn’t find any evidence of improper accounting methods or misrepresentations when it last looked at Autonomy’s finances before Hewlett- Packard bought the software company. Deloitte, which said it wasn’t employed to do due diligence on the deal, last audited Autonomy’s finances for the year ended Dec. 31, 2010.
Apotheker, 59, agreed in November 2011 to buy Autonomy for $10.3 billion to diversify away from hardware and expand into cloud-computing and add software that searches a broad range of data, including e-mails, music, videos and posts on social networks such as Facebook Inc. Apotheker left in 2011 after less than a year on the job following repeated strategy shifts and forecast cuts.
The complaint filed today seeks class-action status and unspecified damages for all investors who bought company shares from Aug. 19, 2011, to Nov. 20, 2012.
Michael Thacker, a spokesman for Palo Alto, California- based Hewlett-Packard, declined to comment immediately on the complaint.
The writedown is another blow for the company, which is already suffering from management turmoil and slowdowns in its personal-computer, printer and technology-services businesses.
Hewlett-Packard rose 2.4 percent to $12.74 at 3:48 p.m. in New York trading.
The case is Nicolow v. Hewlett-Packard Co., 12-05980, U.S. District Court, Northern District of California (San Francisco).