HP says Autonomy inflated 2010 profits by 81 percent ahead of buyout 664j24

Hewlett-Packard said Autonomy, the software firm it bought in 2011, overstated profits at one of its main British units by 81 percent in the year before it was sold in Britain's biggest ever technology deal.

Little over a year after the $11.7 billion acquisition, the Silicon Valley company wrote down the value of Autonomy by $8.8 billion, accusing the management of ing irregularities. 1o5f5d

Autonomy was founded and led by British entrepreneur Mike Lynch, who has repeatedly denied the allegations.

In the first specific allegation since the writedown, HP said it had refiled 2010 s for Autonomy Systems Limited, one of its British operating units, revising the annual revenue down by 54 percent to 81 million pounds.

(Also see: HP, CEO Whitman ordered to defend shareholder lawsuit over Autonomy buyout)

Net profit for the period was reduced by 86 million pounds to 19.6 million pounds according to the filing, seen by Reuters, that HP says it has made to Companies House - the organisation that s UK companies.

The drop, $133 million at 2010 exchange rates, compares with reported 2010 net profit for Autonomy as a whole of $217 million, according to the company's annual report.

Lynch had previously said that differences in IFRS and U.S. GAAP ing standards appeared to have had a role in some of HP's allegations.

"The extensive investigations undertaken by Hewlett-Packard into the past ing practices of the group, have revealed extensive errors (including misstatements) in the previously issued financial statements," the revised s said.

(Also see: HP's Autonomy faces UK probe)

HP, based in Palo Alto, California, has said it ed information from an unidentified whistleblower to the U.S. Department of Justice, the SEC and Britain's Serious Fraud Office. Until now, however, few details had emerged about the nature of the alleged irregularities.

HP said most of the reduction in profits was due to "fundamental errors", with the remainder put down to differences in ing policies used by HP and Autonomy.

Lynch's spokeswoman, Vanessa Colomar, said Lynch and the former senior management of Autonomy rejected the allegation of overstated profits which was contained in the refiled s. Colomar added that the size of the adjustments in the 2010 results did not fit with the scale of HP's $5 billion writedown.

"We continue to reject these allegations by HP," she said.

© Thomson Reuters 2014