The HP website has plenty of details about "Idol 10," a new product based on technology it acquired from Autonomy. Autonomy is a British software company HP bought last year for $11.7 billion. However, a shareholder lawsuit claims HP's board is engaging in fraud because "Idol 10" doesn't exist.
"The executives of the company, including the directors it's alleged, knew that this product didn't exist, yet on Nov. 29 2011, a year ago, they told the world they had this new next-generation platform IDOL 10," Joe Cotchett said. "It did not exist."
Other tech companies turned down offers to buy Autonomy as too costly. HP is taking an $8 billion write-down, blaming accounting irregularities at Autonomy. Shareholder attorneys claim HP is trying to white-wash a deal gone sour.
"If you buy a product that is not and doesn't work, you don't tell the public that it works; that's the heart of the complaint," attorney Mark Molumphy said.
The HP board is on the hot seat, including Silicon Valley pioneers Meg Whitman, Ray Lane and Marc Andreessen, who created the first widely used Web browser. Should they have known better?
"Marc Andreessen is not necessarily a superstar valuation expert or superstar accountant, so I would say no," Santa Clara University Professor Robert Hendershott, Ph.D., said. "In this case, I don't even think the premise really applies. Although Autonomy was a technology company, it wasn't Silicon Valley based. It didn't have roots here. There would have been any ear to the ground inside information that the Silicon Valley giants would have."
The lawsuit has been filed in San Jose. It's expected that insiders may step forward with additional details that could help support the claims of fraud.