H.P. Claim Highlights a Gray Area in Software Sales

By PETER EAVIS Catherine Lesjak, Hewlett-Packard's finance chief, said Autonomy's profitability was less than it seemed. Mike Lynch, its former chief, denied any improprieties.Ryan Anson/Bloomberg News, via Getty ImagesCatherine Lesjak, Hewlett-Packard’s finance chief, said Autonomy’s profitability was less than it seemed. Mike Lynch, its former chief, denied any improprieties. Hewlett-Packard’s accusations of “serious accounting improprieties” at Autonomy are eerily reminiscent of accounting missteps uncovered over a decade ago at software firms like MicroStrategy, Computer Associates and Lernout & Hauspie. “It looks like a throwback to the bubble era,” said Jack T. Ciesielski, publisher of The Analyst’s Accounting Observer. Indeed, the claims made on Tuesday suggest that there is something about the nature of the software business that makes it easier for executives to indulge in questionable accounting. Article Tools Facebook Save Twitter E-mail Google+ Print Share Permalink Related Links Graphic Graphic: A Long Line of Accounting Scandals H.P. Takes Huge Charge on 'Accounting Improprieties' at Autonomy Hewlett-Packard contends that Autonomy, the British software firm that it acquired for $10 billion last year, misclassified revenue, including sales of hardware with sales of software licenses. Investors care far more about software sales, and this purported strategy made it look as if software was doing better than it was. The hardware sales were unprofitable, Hewlett says, and accounted for 10 to 15 percent of Autonomy’s revenue before the purchase. In addition, Hewlett contends that this practice made a measure of profitability called gross margin look stronger than it really was. *# Best buy Magnaflow 16689 Stainless Steel 2.5' Dual Cat-Back Exhaust System โ‚ชโ‚ช: New Mirage Truck Rack for Sports 'The Original Disappearing Pick-up Rack' *# Best buy Milwaukee 4950-20 5000 Watt Vanguard 9 HP 270cc Portable Generator *# Best buy ACDelco 214-1278 Valve Assembly โ‚ชโ‚ช: New Suzuki Boulevard 800 C-50 C50 Windshield 17CT โ‚ชโ‚ช: New Hadley Bully Manual Dual Air Horn Kit *# Best buy Honda VTX-1800 S R Retro Cobra Rear Floorboards โ‚ชโ‚ช: New Allstar Performance ALL10300 1-3/4' x 7' Radius Hydraulic Round Tubing Bender โ‰งโ–ฝโ‰ฆ Hot Product aFe 75-10142 Magnum Force Stage 2 Pro Guard 7 Cold Air Intake System for Jeep Wrangler L6-4.0L $$ Review Gibson 69504 Stainless Steel Split Rear Dual Cat-Back Exhaust System $$ Review Smittybilt 2640021 Smart Cover for Toyota Tacoma with 6' Bed *# Best buy Airaid 400-222 Intake System *# Best buy Extang 50720 Express Tonno 1999-2006 Ford Super Duty Short Bed (6 1/2 ft) โ‚ชโ‚ช: New Magnaflow 15566 SS Dual Same Side Exit Cat-Back System for 2010 GM Silverado / Sierra 1500 *# Best buy RacingBrake 9004-111 Slotted Finish Front Brake Rotor for Subaru WRX - Pair $$ Review SCORPIO SR-i900 RFID TWO-WAY FM MOTORCYCLE SECURITY SYSTEM - ALARM โ‚ชโ‚ช: New Westin 25-0830 Signature Series Step Bars - Black โ‚ชโ‚ช: New Flowmaster 817446 Cat-Back Exhaust System for Ford F-250/F-350 5.4L/6.2L/6.8L V8/V10 Engine โ‰งโ–ฝโ‰ฆ Hot Product JET 89819 Manual Transmission Module $$ Review Rancho RS6505 Suspension System โ‚ชโ‚ช: New Clear 22' Windshield for Harley Sportster 883 1200 XL $$ Review Putco 94137 Harley-Davidson Mirror Stainless Steel Grille with Wings Logo โ‚ชโ‚ช: New Scorpion EXO-900 Transformer Motorcycle Helmet Matte Anthracite (Small 89-4211) โ‚ชโ‚ช: New Injen Technology SP1974P Polished Mega Ram Short Ram Intake System *# Best buy Tanabe T80011R Medalion Concept G Cat-Back Exhaust System for Nissan 240SX 1995-1998 $$ Review ECLIPSE AVN726T-CPK Multimedia Navigation Receiver for Toyota Specific Vehicles/7-Inch Wide Screen/Bluetooth/Back-up Camera (Included) โ‰งโ–ฝโ‰ฆ Hot Product 07-11 Mercedes-Benz GL450 MAXpider Molded Beige Carpet Floor Mats $$ Review Drag Specialties 1 1/2' Big Buffalo Bar - 13' Ape Hanger Bend - Chrome Chrome 18031504 *# Best buy AEM 21-544B Blue Cold Air Intake System โ‚ชโ‚ช: New Aries 4062 Black Grille Guard *# Best buy BAK Industries R15403 RollBak G2 Aluminum Hard Retractable Tonneau Bed Cover $$ Review Extang 2840 BlackMax Tonneau Cover *# Best buy Gibson 65003 Stainless Steel Extreme Dual Cat-Back Exhaust System $$ Review RacingBrake 2133-381 Open Slotted Finish Front Brake Rotor for 370Z (Sport) / G37S (Akebono) - Pair โ‰งโ–ฝโ‰ฆ Hot Product First Manufacturing Men's Vented Scooter Jacket with Blacked Out Highly Reflective Piping (Black, Small) $$ Review Pontiac 2006-2009 Solstice Microbead Car Cover โ‚ชโ‚ช: New 6 Inch Soft Sleeper 5.5 Twin Mattress Bed With 3 Inch Visco Elastic Memory Foam Plus Memory Foam Pillow Made From 100% Visco Elastic Memory Foam $$ Review Tanabe T80063 Medalion Concept G Cat-Back Exhaust System for Nissan 350Z 2003-2006 โ‰งโ–ฝโ‰ฆ Hot Product Mallory 4567801 Unilite Breakerless Electronic Distributor โ‰งโ–ฝโ‰ฆ Hot Product SureStep Deluxe XLT; 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