Welcome!

Cloud Expo Authors: Paul Speciale, Dana Gardner, Carmen Gonzalez, Shelly Palmer, Elizabeth White

Related Topics: Virtualization, Java, Open Source, Web 2.0, HP, Cloud Expo

Virtualization: Article

Open Letter from Mike Lynch to HP's Board of Directors

Lynch to HP: ‘Put Up or Shut Up’

Mike Lynch, the former CEO of Autonomy, wrote an open letter to HP Tuesday demanding the specifics behind its allegations last week that Autonomy's books were doctored and that HP was misled into buying the UK company for vastly more than it was ever worth.

He wants the documents HP turned over to the Securities and Exchange Commission and Britain's Serious Fraud Office (SFO) and he wants to know how HP derived the $8.8 billion write-off.

Here's the letter in full:

Open Letter from Dr Mike Lynch to the Board of Directors of Hewlett-Packard

27 November 2012

To: The Board of Directors of Hewlett-Packard Company

On 20 November Hewlett-Packard (HP) issued a statement accusing unspecified members of Autonomy's former management team of serious financial impropriety. It was shocking that HP put non-specific but highly damaging allegations into the public domain without prior notification or contact with me, as former CEO of Autonomy.

I utterly reject all allegations of impropriety.

Autonomy's finances, during its years as a public company and including the time period in question, were handled in accordance with applicable regulations and accounting practices. Autonomy's accounts were overseen by independent auditors Deloitte LLC, who have confirmed the application of all appropriate procedures including those dictated by the International Financial Reporting Standards used in the UK.

Having no details beyond the limited public information provided last week, and still with no further contact from you, I am writing today to ask you, the board of HP, for immediate and specific explanations for the allegations HP is making. HP should provide me with the interim report and any other documents which you say you have provided to the SEC and the SFO [the UK's Serious Fraud Office] so that I can answer whatever is alleged, instead of the selective disclosure of non-material information via background discussions with the media.

I believe it is in the interest of all stakeholders, and the public record, for HP to respond to a number of questions:

  • Many observers are stunned by HP's claim that these allegations account for a $5 billion write down and fail to understand how HP reaches that number. Please publish the calculations used to determine the $5 billion impairment charge. Please provide a breakdown of the relative contribution for revenue, cash flow, profit and write down in relation to:
  • The alleged "mischaracterization" of hardware that HP did not realize Autonomy sold, as I understand this would have no effect on annual top or bottom lines and a minor effect on gross margin within normal fluctuations and no impact on growth, assuming a steady state over the period;
  • The alleged "inappropriate acceleration of revenue recognition with value-added resellers" and the "[creation of] revenue where no end-user customer existed at the time of sale", given their normal treatment under IFRS; and
  • The allegations of incorrect revenue recognition of long-term arrangements of hosted deals, again given the normal treatment under IFRS.
  • In order to justify a $5 billion accounting write down, a significant amount of revenue must be involved. Please explain how such issues could possibly have gone undetected during the extensive acquisition due diligence process and HP's financial oversight of Autonomy for a year from acquisition until October 2012 (a period during which all of the Autonomy finance reported to HP's CFO Cathie Lesjak).
  • Can HP really state that no part of the $5 billion write down was, or should be, attributed to HP's operational and financial mismanagement of Autonomy since the acquisition?
  • How many people employed by Autonomy in September 2011 have left or resigned under the management of HP?
  • HP raised issues about the inclusion of hardware in Autonomy's IDOL Product revenue, notwithstanding this being in accordance with proper IFRS accounting practice. Please confirm that Ms Whitman and other HP senior management were aware of Autonomy's hardware sales before 2012. Did Autonomy, as part of HP, continue to sell third-party hardware of materially similar value after acquisition? Was this accounted for by HP and was this reported in the Autonomy segment of their accounts?
  • Were Ms Whitman and Ms Lesjak aware that Paul Curtis (HP's Worldwide Director of Software Revenue Recognition), KPMG and Ernst & Young undertook in December 2011 detailed studies of Autonomy's software revenue recognition with a view to optimising for US GAAP?
  • Why did HP senior management apparently wait six months to inform its shareholders of the possibility of a material event related to Autonomy?

Hewlett Packard is an iconic technology company, which was historically admired and respected all over the world. Autonomy joined forces with HP with real hopes for the future and in the belief that together there was an opportunity to make HP great again. I have been truly saddened by the events of the past months, and am shocked and appalled by the events of the past week.

I believe it is in the best interests of all parties for this situation to be resolved as quickly as possible.

I am placing this letter in the public domain in the interests of complete transparency.

Yours faithfully,

Dr Mike Lynch

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@CloudExpo Stories
Performance is the intersection of power, agility, control, and choice. If you value performance, and more specifically consistent performance, you need to look beyond simple virtualized compute. Many factors need to be considered to create a truly performant environment. In their General Session at 15th Cloud Expo, Phil Jackson, Development Community Advocate at SoftLayer, and Harold Hannon, Sr. Software Architect at SoftLayer, to discuss how to take advantage of a multitude of compute option...
Come learn about what you need to consider when moving your data to the cloud. In her session at 15th Cloud Expo, Skyla Loomis, a Program Director of Cloudant Development at Cloudant, will discuss the security, performance, and operational implications of keeping your data on premise, moving it to the cloud, or taking a hybrid approach. She will use real customer examples to illustrate the tradeoffs, key decision points, and how to be successful with a cloud or hybrid cloud solution.
In today's application economy, enterprise organizations realize that it's their applications that are the heart and soul of their business. If their application users have a bad experience, their revenue and reputation are at stake. In his session at 15th Cloud Expo, Anand Akela, Senior Director of Product Marketing for Application Performance Management at CA Technologies, will discuss how a user-centric Application Performance Management solution can help inspire your users with every appli...
With the explosion of the cloud, more businesses are transitioning to a recurring revenue model to generate reliable sales, grow profits, and open new markets. This opportunity requires businesses to get to market quickly with the pricing and packaging options customers want. In addition, you will want to take advantage of the ensuing tidal wave of data to more effectively upsell, cross-sell and manage your customers. All of this is possible, but only with the right approach. At 15th Cloud Exp...
Planning scalable environments isn't terribly difficult, but it does require a change of perspective. In his session at 15th Cloud Expo, Phil Jackson, Development Community Advocate for SoftLayer, will broaden your views to think on an Internet scale by dissecting a video publishing application built with The SoftLayer Platform, Message Queuing, Object Storage, and Drupal. By examining a scalable modular application build that can handle unpredictable traffic, attendees will able to grow your de...
The cloud provides an easy onramp to building and deploying Big Data solutions. Transitioning from initial deployment to large-scale, highly performant operations may not be as easy. In his session at 15th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, will discuss the benefits, weaknesses, and performance characteristics of public and bare metal cloud deployments that can help you make the right decisions.
Over the last few years the healthcare ecosystem has revolved around innovations in Electronic Health Record (HER) based systems. This evolution has helped us achieve much desired interoperability. Now the focus is shifting to other equally important aspects – scalability and performance. While applying cloud computing environments to the EHR systems, a special consideration needs to be given to the cloud enablement of Veterans Health Information Systems and Technology Architecture (VistA), i.e....
Cloud and Big Data present unique dilemmas: embracing the benefits of these new technologies while maintaining the security of your organization’s assets. When an outside party owns, controls and manages your infrastructure and computational resources, how can you be assured that sensitive data remains private and secure? How do you best protect data in mixed use cloud and big data infrastructure sets? Can you still satisfy the full range of reporting, compliance and regulatory requirements? I...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using...
Is your organization struggling to deal with skyrocketing volumes of digital assets? The amount of data is growing exponentially and organizations are having a hard time managing this growth. In his session at 15th Cloud Expo, Amar Kapadia, Senior Director of Open Cloud Strategy at Seagate, will walk through the essential considerations when developing a cloud storage strategy. In this discussion, you will understand the challenges IT is facing, why companies need to move to cloud, and how the...
If cloud computing benefits are so clear, why have so few enterprises migrated their mission-critical apps? The answer is often inertia and FUD. No one ever got fired for not moving to the cloud – not yet. In his session at 15th Cloud Expo, Michael Hoch, SVP, Cloud Advisory Service at Virtustream, will discuss the six key steps to justify and execute your MCA cloud migration.
The 16th International Cloud Expo announces that its Call for Papers is now open. 16th International Cloud Expo, to be held June 9–11, 2015, at the Javits Center in New York City brings together Cloud Computing, APM, APIs, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speak...
Most of today’s hardware manufacturers are building servers with at least one SATA Port, but not every systems engineer utilizes them. This is considered a loss in the game of maximizing potential storage space in a fixed unit. The SATADOM Series was created by Innodisk as a high-performance, small form factor boot drive with low power consumption to be plugged into the unused SATA port on your server board as an alternative to hard drive or USB boot-up. Built for 1U systems, this powerful devic...
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual C...
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, has been named “Bronze Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Cloudian is a Foster City, Calif.-based software company specializing in cloud storage. Cloudian HyperStore® is an S3-compatible cloud object storage platform that enables service providers and enterprises to bui...
SYS-CON Events announced today that TechXtend (formerly Programmer’s Paradise), a leading value-added provider of server and storage virtualization, and r-evolution will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. TechXtend (formerly Programmer’s Paradise) is a leading value-added provider of software, systems and solutions for corporations, government organizations, and academic instit...
Every healthy ecosystem is diverse. This is especially true in cloud ecosystems, where portability and interoperability are more important than old enterprise models of proprietary ownership. In his session at 15th Cloud Expo, Mark Baker, Server Product Manager at Canonical/Ubuntu, will discuss how single vendors used to take the lead in creating and delivering technology, but in a cloud economy, where users want tools of their preference, when and where they need them, it makes no sense.
The consumption economy is here and so are cloud applications and solutions that offer more than subscription and flat fee models and at the same time are available on a pure consumption model, which not only reduces IT spend but also lowers infrastructure costs, and offers ease of use and availability. In their session at 15th Cloud Expo, Ermanno Bonifazi, CEO & Founder of Solgenia, and Ian Khan, Global Strategic Positioning & Brand Manager at Solgenia, will discuss this shifting dynamic with ...
The emergence of cloud computing and Big Data warrants a greater role for the PMO to successfully manage enterprise transformation driven by these powerful trends. As the adoption of cloud-based services continues to grow, a governance model is needed to orchestrate enterprise cloud implementations and harness the power of Big Data analytics. In his session at 15th Cloud Expo, Mahesh Singh, President of BigData, Inc., to discuss how the Enterprise PMO takes center stage not only in developing th...
Cloud computing started a technology revolution; now DevOps is driving that revolution forward. By enabling new approaches to service delivery, cloud and DevOps together are delivering even greater speed, agility, and efficiency. No wonder leading innovators are adopting DevOps and cloud together! In his session at DevOps Summit, Andi Mann, Vice President of Strategic Solutions at CA Technologies, will explore the synergies in these two approaches, with practical tips, techniques, research dat...