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Monday, November 26, 2012

Autonomy Founder Challenges H.P.\'s Claims

Autonomy Founder Challenges H.P.'s Claims

SAN FRANCISCO - Mike Lynch was growing bored in a business meeting in London on Tuesday when his phone buzzed.

Mike Lynch, who founded Autonomy, blamed internal foot-dragging by Hewlett-Packard for problems after H.P. bought his firm.

A text message from a friend informed him that Hewlett-Packard was taking an $8.8 billion charge. A few minutes later, another message said H.P. was putting most of the blame for the write-down on accounting problems at Autonomy, the company Mr. Lynch co-founded and sold to H.P. last year for $10 billion. There was talk of potentially criminal activities.

Since that jolt, Mr. Lynch has been unusually candid and vocal in defending himself and the company he built, rather than hiding out behind a phalanx of lawyers as might be expected. He says he was blindsided by a long-prepared public relations onslaught by H.P., little of which had to do with the substance of its claims about Autonomy.

“It's been a bit of a shock,” said Mr. Lynch, who joined Hewlett-Packard in October 2011 but was fired by Meg Whitman, H.P.'s chief executive, in May. “The last time I talked to anyone there was in June, for about an hour.”

Mr. Lynch was once the face of H.P.'s future, thanks to Autonomy's high-end business analysis software. Last week, he became the public face of what the company said was a vast, systemic fraud.

But in charging gross improprieties at Autonomy, H.P. has attacked a man who may be Britain's most notable and contentious technology executive, and one of Europe's biggest self-made successes. Mr. Lynch, 47, sits on the boards of the British Broadcasting Corporation and the British Library, and was awarded an Order of the British Empire for his service to business.

Before Hewlett-Packard bought Autonomy, it was listed on Britain's major stock index. Its prominence allowed it to hire top engineers, who were worked remorselessly hard compared with their Silicon Valley counterparts, former employees say.

People who have worked with Mr. Lynch note both his accomplishments and his temper. “I don't think I've ever called anyone an idiot in the office, but I'm direct,” he said. “That's part of getting stuff done. I find good people and I value them. That is how I've been able to do what I've done.”

While Autonomy is not well known in the United States, it was considered a pioneer in the booming field of Big Data, and its pattern-seeking algorithms are at work at over 400 companies, including Oracle, Adobe, Cisco and, even before the purchase, Hewlett-Packard. Mr. Lynch personally made about $800 million from the sale to H.P.

Even with all of his money, intellect and a doctorate from Cambridge, what Mr. Lynch says he cannot figure out is how H.P. thinks he has done anything wrong.

Hewlett-Packard has said that its internal investigation, set off by a whistle-blower, uncovered major problems at Autonomy that were present before the merger. Among them were the booking of hardware sales as higher-margin software sales, and resellers reporting sales that did not exist.

Mr. Lynch said Autonomy's sales fell off a cliff after it merged with Hewlett-Packard - not because it suddenly had to account for things legally, as H.P. claims, but because of institutional foot-dragging.

“They drove out the top 100 people from Autonomy, and a bunch of trainees were put in” to sell Autonomy products, he said. “H.P. salesmen got better commissions for selling our competitors' products.”

Mr. Lynch said H.P. told him it could not formally approve Autonomy's software for use on its customers' servers, “when it was already running on thousands of H.P. machines around the world.” He added: “H.P. has core structural problems.”

Hewlett-Packard counters that Mr. Lynch was a singular force of resistance to the merger as soon as his check cleared.

“He was at every strategy session, was in person or on video for every meeting of the executive council,” said an H.P. executive briefed on the investigation who spoke on the condition of anonymity because he was not authorized to speak on the record. “He wouldn't work with anyone. Sometimes he was enthusiastic, but other times he'd say, ‘This makes no sense. I'm going back to London.' ”

On at least two different cross-country flights on an H.P. private jet, the executive said, Mr. Lynch went to the back of the aircraft and refused to talk with anyone for the entire flight.

A spokeswoman for Mr. Lynch, Vanessa Colomar, said he had not been on the corporate jet before and “didn't know the etiquette.” She said he spent the time working.

Michael J. de la Merced contributed reporting from New York.

A version of this article appeared in print on November 26, 2012, on page B1 of the New York edition with the headline: Autonomy Founder Challenges H.P.'s Claims.