"What those two things did was effectively inflate revenue," said Whitman, "and inflate gross margin. Second, licensing transactions with certain value-added resellers where, in some cases, there was no end user. So the software was sold into the VAR when there was no end user.
"Finally, they converted long-term hosting deals to short-term licensing deals. So, for example, when they bought a number of different companies they would go in and take these long-term hosted deals and turn them into short-term revenue, which had the effect of inflating revenue without the proper disclosures," said Whitman.
All these measures would have had the effect of making the company appear as if it was growing faster than it was, increasing its share value and, hence, its sale value when HP acquired the company.
Lynch, who made about £560m selling the company to HP, "flatly rejected" the allegations of "serious accounting improprieties" made today. In a statement released to Reuters newswire, a spokesperson said: "The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false.
"HP's due diligence review was intensive, overseen on behalf of HP by KPMG, Barclays and [advisory and asset management firm] Perella Weinberg. HP's senior management has also been closely involved with running Autonomy for the past year."
Lynch had been ousted from the company within months of the acquisition as Autonomy sales failed to live up to expectations, while senior HP management questioned the company's operational procedures.
According to some reports, HP had sought ways to extricate itself from the acquisition after Whitman joined, including looking for financial irregularities in Autonomy's accounts, but could not at the time find material grounds for doing so.
The revelation coincided with poor financial results from HP, which saw revenue declines in all of HP's operating divisions. Indeed, some observers suggested that the claims of accounting irregularities were relatively trivial compared to the wider problems unveiled by HP today, when it released its fourth-quarter and full-year financial results.
They showed significant declines in revenues in all of HP's divisions, while other analysts noted that virtually all of HP's acquisitions in recent years could be classified as failures.
Today's revelations also throw a sharper focus over the row last year between Autonomy's Mike Lynch and Oracle executives. Oracle's Mike Hurd had claimed that Lynch had been actively shopping Autonomy, but that Oracle had baulked at the asking price of $6bn. Lynch denied that he had actively been seeking a buyer for Autonomy prior to HP's offer.
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