Tim Steer slams HP after $8.8bn Autonomy write-off

Tim Steer, manager of the Artemis UK Growth fund , says the warning signs pointing to Autonomy’s problems were ‘written all over the accounts’ and that HP should have done more due diligence.

Steer, who had a large short position on Autonomy last year and got hit when Hewlett-Packard bought Autonomy in August 2011, told Wealth Manager he is surprised HP did not more stringently check Autonomy’s accounts.

In its results today, HP revealed it had an $8.8 billion (£5.5 billion) impairment charge, the majority of which is linked to ‘serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation,’ which occurred prior to HP’s acquisition of the firm.

HP has consequently asked US and UK regulators to investigate alleged misrepresentations of Autonomy’s financial position before HP bought the UK software company last year, according to reports.

Steer said: ‘There are one or two fund managers and investment analysts who are bold enough to stand up and take a view, especially when they had a look at the sets of accounts that Autonomy were producing.

‘It is surprising that HP never opened up the reports and accounts ahead of offering $12 billion for Autonomy. The warning signs were written all over the accounts.’

Steer conceded his view on Autonomy at the time – to short the stock – hit the fund, although ultimately it is the correct view.

‘It was obvious to quite a few of us that this company had issues. I was short of it…other managers got lucky.’

At the time of the bid, Steer said he was ‘gobsmacked’ by the premium that HP had agreed to pay in the $12 billion deal to buy Autonomy.

He added that these types of UK companies getting bought by US investors fall by the wayside after only a year of being bought, citing Atlantic Computers as another example.