Autonomy avoids layoffs in the Bay State

Hewlett-Packard Co. said on Wednesday that the accounting troubles found this week at the British software maker it owns, Autonomy Corp., will not result in layoffs at the subsidiary’s Massachusetts offices.

HP executives on Tuesday blamed Autonomy’s former executives with orchestrating an accounting fraud that inflated revenues and profitability prior to the computer giant’s October 2011 purchase of the firm for $11.1 billion. As a result of the irregularities, the Palo Alto, Calif., based HP took an $8.8 billion write-down and recorded a $6.9 billion loss in its most recent quarter.

Still, said an HP spokesman, those losses will not have any direct impact on Autonomy’s business operations in Massachusetts or elsewhere.


“We remain 100 percent committed to Autonomy and its industry-leading technology,” said Michael Thacker. “We believe Autonomy’s many innovations and dedicated employees will play a major role in the growth of HP’s software business.”

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Autonomy gained a significant foothold in Massachusetts in May 2011 when the firm bought a portion of the Boston document storage company Iron Mountain Inc. for $380 million in cash. The deal was one of many acquisitions that added to Autonomy’s rapid growth over 16 years.

Autonomy bought several of Iron Mountain’s digital products, such as electronic archives and software for searching digital legal documents, and took over an office in Southborough with about 500 Massachusetts employees. Autonomy also has an office in Boston.

Iron Mountain sold off the software products as part of a broader plan to streamline after being pressured by shareholders to boost returns.

HP already has a significant presence in Massachusetts through many of the company’s other acquisitions. In 2009, it bought Marlborough’s 3Com for $2.7 billion and two years later paid $350 million for the database management firm Vertica Systems in Cambridge.


When HP bought Autonomy, the British firm was already a major enterprise software company, with some 65,000 customers around the world using its products for data management and storage. But HP executives now say they were misled regarding the Autonomy’s real value, and that it mischaracterized revenues and profitability.

Autonomy founder and former chief executive Mike Lynch called the allegations “utterly wrong” in an interview with the The Wall Street Journal. The company’s auditor, Deloitte, ‘‘categorically denies’’ knowledge of improper accounting or misrepresentations of the company’s financial reports, it said in a statement Wednesday.

Lynch, who left HP in May, is famous in Britain’s tech industry, said Alan Pelz-Sharpe, an industry analyst in London with 451 Research. Pelz-Sharpe had viewed the HP deal with Autonomy skeptically.

At the time, Pelz-Sharpe wrote, “in my gut, I think this deal may still get derailed. If not, the negative repercussions could be huge for HP and its shareholders.”

Pelz-Sharpe objected to the multibillion-dollar price tag for Autonomy. He noted the two companies had different cultures that were bound to clash: HP is known as conservative and research driven, while Autonomy was an aggressive company with a mercurial leader.


“I couldn’t fathom how this all added up,” Pelz-Sharpe said. “Obviously, it was a mistake.”

Material from the Associated Press was used in this report. Michael B. Farrell can be reached at