Soul music - What's going on?
"Lynch and Hussain," said HPE in its court filings, "caused Autonomy group companies to engage in improper transactions and accounting practices that artificially inflated and accelerated Autonomy's reported revenues, understated its costs of goods sold (thereby artificially inflating its gross margins), misrepresented its rate of organic growth and the nature and quality of its revenues, and overstated its gross and net profits."
I can understand, just, HPE's claim that Autonomy inflated it's gross margins by way of schemes to buy and sell equipment, and pay resellers to do so. Book the revenue on the top line, and move the costs incurred by Autonomy away from the "cost of goods" ie above the gross margin line, and into "other expenses" below the gross. Even if Autonomy actually did this, booked it's costs lower down the P & L it would still have no net effect whatsoever on Net Profits.
HPE however claim that Autonomy overstated its Net Profits, which is explicitly stating they didn't book their scheme costs in the P & L at all.
Even if time shifted, ie revenue in period 1, costs in period 2 etc it only enhances the first period and only then until the most basic of auditing procedures uncovers it.
Good luck to the Judge sitting through this.
Biting the hand that feeds IT
