HP’s CEO Meg Whitman has been ordered to mount a defence against an investor lawsuit over Autonomy purchase
A California federal judge has ordered HP Chief Executive Officer (CEO) Meg Whitman to testify in a lawsuit which claims Hewlett-Packard management knew statements about HP’s acquisition of Autonomy were misleading. The problematic 2011 acquisition of the British software company continues to deliver major headaches at HP, with multiple lawsuits oblaming executives for what is seen as a d disastrous mistake.
In the latest $1 billion (£647m) lawsuit, HP shareholders accused HP’s management team of ignoring warnings before it bought Autonomy for $11.3 billion (£7.3bn) in 2011 and that the company’s financial numbers had been exaggerated. It is also claimed that HP tried to get out of the deal before it closed. The company later took a nearly $9 billlion write-down largely connected with the purchase.
Pension fund calls HP to account
Senior District Judge Charles Breyer ruled on Tuesday in response to the lawsuit filed in November 2012 on behalf of PGGM Vermogensbeheer – a Dutch pension fund – and other HP shareholders.
Judge Breyer ruled in his San Francisco federal court that Whitman and other HP executives must defend themselves against the charges, according to Reuters. That court ruling also dismissed claims against five other former HP directors and executives, including previous CEO Leo Apotheker.
The investors allege that HP’s management was negligent because of the $8.8 billion (£5.7bn) write-down on the deal HP announced in November 2012. HP officials blamed ‘accounting irregularities’ by Autonomy executives in the months leading up to the deal. The investors allege that the resulting drop in HP’s stock price effectively wiped billions of dollars from the company’s market value. The FBI are said to be investigating the allegations, as is the UK’s Serious Fraud Office (SFO).
Dr Mike Lynch (who was Autonomy’s founder and CEO at the time of the deal), has vehemently disputed HP’s accusations that he or any other Autonomy executives doctored financial records before the deal, and has said it was HP’s mishandling of the British company afterward that created problems.
Although Judge Breyer has ordered HP and Whitman to defend the action, he also ruled against some of the plaintiffs’ arguments in the 20-page ruling.
“The complaint fails to establish any coherent motive as to why defendants would knowingly purchase a company for several times its actual value or that they knew Autonomy’s accounting was problematic,” Breyer was quoted as saying.
The judge also apparently limited the claims that can be brought against Whitman and HP. Breyer said that the investors’ claims against the company and its CEO are limited to the period after 23 May, 2012, not before.
HP’s has undergone a traumatic restructuring over the past couple of years, but Whitman’s turnaround seems to be on the right track, after HP posted income of $1.4 billion (£863m) for its fourth quarter. This was a significant improvement over the $8.9 billion (£5.5bn) loss in the same year period, when it was hit by the $8.8 billion (£5.4bn) charge against its acquisition of Autonomy. Revenues meanwhile hit $29.1 billion (£17.9bn), but this was a 3 percent drop over the same period in 2012.
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Originally published on eWeek.