Autonomy founder says its sales practices were legal

Mike Lynch, who founded the British software company accused by Hewlett-Packard of falsifying finances, said that while he might have used some of the contested accounting and sales methods, they were all legal.

One claim levelled by HP is that Autonomy mischaracterised some revenue from unprofitable hardware and improperly included it as "licence revenue".

HP said this week it recorded an US$8.8 billion write-down related to last year's purchase of Autonomy and that more than US$5 billion of that impairment charge was the result of accounting practices.

"Essentially we would offer a discount on hardware, especially if people were buying software or a big long-term partner," Lynch said. "A bank would buy software from us every other quarter, but they would also buy hardware from us."

Lynch, who said he had not yet hired a lawyer, has mounted a public campaign against his accusers, appearing on television and giving interviews rejecting HP's version of events, to defend his reputation as one of Europe's most successful technology entrepreneurs.

HP called Autonomy's practices a "wilful effort" to inflate financial results and mislead investors. It said the misrepresentations caused the company to value Autonomy incorrectly before the deal, which ultimately cost the company US$11.1 billion.

John Schultz, HP's general counsel, has said among those practices, which accounted for US$200 million in miscategorised or false revenue, was reselling Dell hardware and recording them as software revenue.