Mike Lynch blames HP for ‘botched’ Autonomy deal in $5bn fraud trial

Autonomy was treated like Hewlett-Packard’s (HP) “unwanted stepchild” following the US tech giant’s “botched” £8.4bn acquisition of the software firm, a court heard today.

HP is suing Autonomy’s founder Mike Lynch and former chief financial officer (CFO) Sushovan Hussain for $5.1bn, alleging that they falsely inflated Autonomy’s revenue figures ahead of the 2011 acquisition.

Read more: Autonomy founder 'inflated sales before HP deal'

However, the defence has blamed HP for the failed deal, saying that the announcement of the acquisition coincided with HP’s poor trading results which caused the company’s share price to plunge 20 per cent within the day.

“The board suffered a collective loss of nerves”, Robert Miles QC, for the defence, told the High Court.

Leo Apotheker, chief executive at the time of the deal, was sacked following the announcement, and replaced by Meg Whitman who attempted to refocus the company on its core hardware business.

Apotheker and chief strategy and technology officer Shane Robison, who also left the company shortly after the announcement, had been the “architects” of the deal as they aimed to transform HP’s “lethargic” business.

“Without them and their enthusiasm the energy fizzled out and Autonomy was left as HP's unwanted stepchild,” Miles told the court.

He claimed that HP “mishandled” the deal and “failed to follow any coherent integration for Autonomy”, leading the US technology giant to suffer losses and seek a scapegoat.

In written submissions the defence said: “The claimants’ choice of target appears to be motivated by the fact that Lynch is wealthy and has a deep pocket for the purposes of this claim.

“Further… the claimants need a high-profile target to blame for the losses that they suffered.”

HP told the court on Monday that Autonomy's revenue was inflated through the sale of hardware, usually at a loss, and “improperly recognised revenues” in order to meet market consensus, alleging that Lynch “committed a deliberate fraud”.

Read more: US prosecutors hit Autonomy founder Lynch with new charges

However, Lynch has denied having day-to-day involvement in Autonomy’s accounts.

“He was not, as the claimants now say, omnipresent and omnipotent,” Miles said.

Lynch was in court to observe proceedings.

The trial, which is expected to stretch into the end of 2019, continues.