Ivory Coast: New prime minister named
















ABIDJAN, Ivory Coast (AP) — President Alassane Ouattara has tapped Foreign Minister Daniel Kablan Duncan to serve as prime minister in a new government one week after the surprise dissolution of cabinet.


The appointment of Duncan, a member of the PDCI party of former President Henri Konan Bedie, was announced at a press conference Wednesday by Amadou Gon Coulibaly, general secretary of the presidency.













Ouattara dissolved the cabinet last week over a feud between his political party and the PDCI over proposed changes to the country’s marriage law.


The PDCI supported Ouattara in the November 2010 runoff election in exchange for the prime minister’s post, helping him defeat incumbent President Laurent Gbagbo. Gbagbo’s refusal to cede office led to five months of violence that claimed at least 3,000 lives before Ouattara’s forces won.


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NJ jury convicts NY man in iPad data breach case
















NEWARK, N.J. (AP) — A federal jury on Tuesday convicted a man of illegally gaining access to AT&T‘s servers and stealing more than 120,000 email addresses of iPad users including New York Mayor Michael Bloomberg and film mogul Harvey Weinstein.


Andrew Auernheimer, of New York, was convicted of identity theft and conspiracy to gain unauthorized access to computers. Each count carries a maximum prison sentence of five years.













Prosecutors said the former Fayetteville, Ark., resident was part of an online group that tricked AT&T’s website into divulging email addresses including those of Bloomberg, Weinstein, then-White House chief of staff Rahm Emanuel, who’s now Chicago’s mayor, and other celebrities.


The group then shared the addresses with the website Gawker, which published them in redacted form accompanying a news article about the breach, prosecutors said.


A second man arrested with Auernheimer early last year, Daniel Spitler, of San Francisco, pleaded guilty that June.


At the time of the arrests, U.S. Attorney Paul Fishman said there was no evidence the men used the swiped information for criminal purposes. But authorities cautioned that it could have wound up in the hands of spammers and scam artists.


According to court papers, the men used a computer script they called the iPad3G Account Slurper to fool AT&T’s servers into thinking they were communicating with an iPad. The theft of the email addresses occurred in June 2010.


Prosecutors said at the time of Auernheimer’s arrest that he had bragged about the operation in a blog posting and in an interview with CNET published online after the Gawker article. Court papers also quoted him declaring in a New York Times article: “I hack, I ruin, I make piles of money. I make people afraid for their lives.”


Auernheimer, after he was charged and released on bail, had declined to comment.


iPad maker Apple Inc., based in Cupertino, Calif., referred questions to AT&T, which acknowledged a security weak spot on a website that exposed the email addresses. AT&T said the vulnerability affected only iPad users who signed up for its 3G wireless Internet service and said it had fixed the problem.


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Singer Fiona Apple cancels tour dates to be with ailing dog
















LOS ANGELES (Reuters) – Grammy award-winning singer Fiona Apple said in a handwritten letter posted on her website on Tuesday that she has canceled upcoming tour dates in North and South America to be with her ailing dog.


Apple, who vowed to make up the concerts, called off three shows in Brazil between November 27 and 30, a Buenos Aires festival appearance on December 1-2 and a December 9 performance in Mexico City, according to her record label, Epic.













The “Criminal” singer and pianist said her 13-year-old pit bull Janet has been suffering from a tumor in her chest among other ailments and appears to be dying.


“She’s my best friend and my mother and my daughter, my benefactor and she’s the one who taught me what love is,” Apple wrote in the four-page letter she penned last week but did not release until Tuesday. “I can’t come to South America. Not now.”


Apple, 35, said that she wants to appreciate the final days with her dog. “I will not be the woman who puts her career ahead of love and friendship,” Apple wrote.


The singer-songwriter, who is touring in support of “The Idler Wheel … ” album, was arrested in September in Texas and charged with felony drug possession for having four grams of hashish, a form of cannabis.


(Reporting By Eric Kelsey; editing by Patricia Reaney and Todd Eastham)


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AP Exclusive: Syrian rebels seize base, arms trove
















BASE OF THE 46TH REGIMENT, Syria (AP) — After a nearly two-month siege, Syrian rebels overwhelmed a large military base in the north of the country and made off with tanks, armored vehicles and truckloads of munitions that rebel leaders say will give them a boost in the fight against President Bashar Assad‘s army.


The rebel capture of the base of the Syrian army’s 46th Regiment is a sharp blow to the government’s efforts to roll back rebels gains and shows a rising level of organization among opposition forces.













More important than the base’s fall, however, are the weapons the rebels found inside.


At a rebel base where the much of the haul was taken after the weekend victory, rebel fighters unloaded half a dozen large trucks piled high with green boxes full of mortars, artillery shells, rockets and rifles taken from the base. Parked nearby were five tanks, two armored vehicles, two rocket launchers and two heavy-caliber artillery cannons.


Around 20 Syrian soldiers captured in the battle were put to work carrying munitions boxes, barefoot and stripped to the waist. Rebels refused to let reporters talk to them or see where they were being held.


“There has never been a battle before with this much booty,” said Gen. Ahmad al-Faj of the rebels Joint Command, a grouping of rebel brigades that was involved in the siege. Speaking on Monday at the rebel base, set up in a former customs office at Syria’s Bab al-Hawa border crossing with Turkey, he said the haul would be distributed among the brigades.


For months, Syria’s rebels have gradually been destroying government checkpoints and taking over towns in the northern provinces of Idlib and Aleppo along the Turkish border.


Rebel fighters say that weapons seized in such battles have been essential to their transformation from ragtag brigades into forces capable of challenging Assad’s professional army. Cross-border arms smuggling from Turkey and Iraq has also played a role, although the most common complaint among rebel fighters is that they lack ammunition and heavy weapons, munitions and anti-aircraft weapons to fight Assad’s air force.


It is unclear how many government bases the rebels have overrun during the 20-month conflict, mostly because they rarely try to hold captured facilities. Staying in the captured bases would make them sitting ducks for regime airstrikes.


“Their strategy is to hit and run,” said Elias Hanna, a retired Lebanese army general and Beirut-based strategic analyst. “They’re trying to hurt the regime where it hurts by bisecting and compartmentalizing Syria in order to dilute the regime’s power.”


The 46th Regiment was a major pillar of the government’s force near the northern city of Aleppo, Syria’s economic hub, and its fall cuts a major supply line to the regime’s army, Hanna said. Government forces have been battling rebels for months over control of Aleppo.


“It’s a tactical turning point that may lead to a strategic shift,” he said.


At the 46th Regiment’s base, about 25 kilometers (15 miles) west of Aleppo, the main three-story command building showed signs of the battle — its walls punctured apparently from rebel rocket attacks. The smaller barracks buildings scattered around the compound, about 2.6 square kilometers (1 square mile) in size, had been looted, with mattresses overturned. A number of buildings had been torched.


Reporters from The Associated Press who visited the base late Monday saw no trace of the government troops who had been defending it — other than the dead bodies of seven soldiers.


Two of them, in camouflage uniforms, lay outside the command building. One of them was missing his head, apparently blown off in an explosion.


The rest were in a nearby clinic. Four dead soldiers were on stretchers set on the floor, one with a large gash in his arm, another with what appeared to be a large shrapnel hole in the back of his head. The last lay on a gurney in another room, his arms and legs bandaged, a bullet hole in his cheek and a splatter of blood on the wall and ceiling behind him as if he had been shot where he lay.


It could not be determined how or when the soldiers had been killed.


The final assault that took the base came after more than 50 days of siege that left the soldiers inside demoralized, according to fighters who took part.


Working together and communicating by radio, a number of different rebels groups divided up the area surrounding the base and each cut the regime’s supply lines, said Abdullah Qadi, a rebel field commander. Over the course of the siege, dozens of soldiers defected, some telling the rebels that those inside were short of food, Qadi said.


The rebels decided to attack Saturday afternoon when they felt the soldiers inside were weak and the rebels had enough ammunition to finish the battle, Qadi said. The battle was over by nightfall on Sunday. Seven rebel fighters were killed in the battle, said al-Faj of the rebels’ Joint Command. Other rebel leaders gave similar numbers.


It remains unclear how many soldiers remained in the base when the rebels launched their attack and what happened to them.


Al-Faj said all soldiers inside were either killed or captured. He said he didn’t know how many were killed, but that the rebels had taken about 50 prisoners, all of whom would be tried in a rebel court. Aside from the 20 prisoners seen at the rebel’s Bab al-Hawa base, the AP was unable to see any other captured soldiers.


The Syrian government does not respond to requests for comment on military affairs and said nothing about the base’s capture. It says the rebels are terrorists backed by foreign powers that seek to destroy the country.


Disorganization has plagued the Syrian opposition since the start of the anti-Assad uprising in March 2011, with exile groups pleading for international help even when they have no control over those fighting inside of Syria.


A newly formed Syrian opposition coalition received a boost Tuesday, when Britain officially recognized it as the sole representative of the Syrian people.


The National Coalition of the Syrian Revolutionary and Opposition Forces was formed in the Gulf nation of Qatar on Oct. 11 under pressure from the United States for a stronger, more united opposition body to serve as a counterweight to more extremist forces.


British Foreign Secretary William Hague said Tuesday the body’s members gave assurances to be a “moderate political force committed to democracy” and that the West must “support them and deny space to extremist groups.”


The United States and the European Union have both spoken well of the body but stopped short of offering it full recognition.


Key to the body’s success will be its ability to build ties with the disparate rebel groups fighting inside Syria. Many rebel leaders say they don’t recognize the new body, and a group of extremist Islamist factions on Monday rejected it, announcing that they had formed an “Islamic state” in Aleppo.


Anti-regime activists say nearly 40,000 people have been killed since Syria’s crisis started 20 months ago.


___


Associated Press write Elizabeth Kennedy contributed reporting from Beirut, Lebanon.


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BlackBerry maker wins vote of confidence ahead of BB10
















TORONTO (Reuters) – Research In Motion Ltd, for months enveloped by a wave of negative sentiment, got a boost on Tuesday when one of its most influential critics raised his rating on the stock ahead of the launch of RIM’s make-or-break new line of BlackBerry 10 devices.


The upgrade by Jefferies & Co analyst Peter Misek pushed RIM’s share price into double digits for the first time in five months, with the stock up more than 3 percent at $ 10.04 in early trading on the Nasdaq.













Misek based his more optimistic view of the BB10 launch, set for January 30, on a favorable reaction by telecom carriers to the devices and the new operating system that powers them.


“Preliminary results from our quarterly handset survey indicate developed market carriers have a much more positive view of BB10 than we expected,” Misek said in a note to clients.


Shares of Waterloo, Ontario-based RIM, a one-time leader in the smartphone industry, have plummeted in recent years as its aging line-up of devices lost ground to faster and snazzier devices from rivals. The company has bet its future on the new BB10.


RIM hopes BB10 smartphones will help claw back market share it has lost in recent years to Apple Inc’s iPhone and devices that run on Google Inc’s Android operating system.


Misek, who doubled his price target on shares of RIM to $ 10 from $ 5, also raised his rating on the stock to “hold” from “underperform”.


“With greater carrier shelf space and marketing support, we now believe BB10 has a 20 percent to 30 percent probability of success,” said Misek, who has long been skeptical of RIM’s odds of engineering a turnaround.


Misek cautioned that there is still downside if RIM’s gamble on BB10 fails, but he noted that the stock could be worth as much as $ 43 within the next 12 months if RIM’s bet pays off and its new operating system gets licensed by other handset makers.


RIM says its new devices will be faster and smoother and have a large catalog of applications, which are now critical to the success of any new line of smartphones. While feedback from both developers and carriers on the new devices has been largely upbeat, financial analysts have been much more circumspect about the company’s prospects.


Misek’s view is not shared by at least one of his counterparts.


In a note to clients on Monday, Pacific Crest analyst James Faucette reiterated his “underperform” rating on RIM’s shares. He said regardless of its quality, there is almost no chance that BB10 will meaningfully change RIM’s trajectory.


RIM shares were up 3.7 percent at $ 9.95 at midmorning on the Nasdaq, while its Toronto-listed shares rose 3.1 percent to C$ 9.89.


(Reporting by Euan Rocha; Editing by Jeffrey Benkoe; and Peter Galloway)


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One Direction’s 2nd CD hits No. 1, sells 540,000
















NEW YORK (AP) — One Direction‘s “Take Me Home” is the taking the boys to the top of the charts — and to new heights.


The group’s sophomore album has sold 540,000 in its first week, according to Nielsen SoundScan. It’s the year’s third-highest debut behind Taylor Swift‘s “Red,” which sold 1.2 million units its first week earlier this month, and Mumford & Sons’ “Babel,” which sold more than 600,000 albums in September in its debut week.













“We just want to say a massive thanks to all the fans who have supported us,” band member Harry Styles, 18, said in an interview Tuesday from London. “We can send tweets and thank them, but 140 characters is never going be enough to say how much it means.”


The album also debuted at No. 1 in the United Kingdom this week and is No. 1 in more than 30 countries, Columbia Records said Wednesday. The fivesome’s debut, “Up All Night,” came in at No. 2 in the United Kingdom last year; it was just released in March in America, where it hit No. 1 and has achieved platinum status.


“We were a little bit nervous about how people were going to take it,” 19-year-old Niall Horan said of the new album during tour rehearsals. “Everyone gets that second album syndrome.”


They say though they’re excited, they won’t be celebrating too much: “We’re finishing rehearsing soon and we’re going home to bed.”


One Direction, who placed third on the U.K. version of “The X Factor” in 2010, is signed to Simon Cowell’s Syco label imprint. In just a year, the band has become worldwide sensations, thanks to its feverish fans. They released a book and have a 3D movie planned. They also made the cut for Barbara Walters’ most fascinating people of 2012 list, which includes New Jersey Gov. Chris Christie and U.S. gold medalist Gabby Douglas.


One Direction says those experiences have helped the group mature.


“We’ve been working hard. We’re starting to grow up,” Horan said. “We’re still young, but we’ve passed the initial teenage years. …We’ve grown up quite quick in the job we have to do and we became a lot more independent.”


The group — which includes Zayn Malik, Liam Payne and Louis Tomlinson — will launch a worldwide tour in February. They hope to work with Katy Perry and are still trying to adjust to the celebrity and fame that has taken over their lives.


“I can see how it gets to people. I guess it’s quite easy to get wrapped up in it all,” Styles said. “We do the same things every other lad our age does. We go out, we have fun, we meet girls and stuff like that. Sometimes it gets written about, which, yeah, we think about it and it’s absolutely crazy. It’s still a bit weird thinking that that’s the way it is.”


___


Online:


http://www.onedirectionmusic.com/us/home/


___


Follow Music Mesfin on Twitter at http://twitter.com/MusicMesfin


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Xoma’s drug combo lowers high blood pressure in late-stage study
















(Reuters) – Xoma Corp said its experimental combination of two drugs met the main goal of lowering hypertension better than a treatment based on either of the drugs alone in a late-stage study, sending the biotechnology company‘s shares up 6 percent.


The combination of perindopril arginine and amlodipine besylate showed statistically significant reduction in sitting systolic and diastolic blood pressure after six weeks of treatment, compared with either drugs alone, Xoma said.













The company is likely to file a new drug application for the combination in 2013, said RBC Capital Markets analyst Adnan Butt.


Xoma said it does not plan to market the product directly but intends to sublicense it to a third party.


“The next thing we expect is for the company to get a partnership for this drug. The terms could include an upfront payment and possible royalties on product sales,” Butt said.


He added that the result would be a modest positive but the key driver is the company’s experimental anti-inflammatory drug gevokizumab. The drug is being tested in a late-stage study for treatment of non-infectious uveitis, an inflammation of the middle layer of the eye.


Xoma’s partner, French pharmaceutical company Les Laboratoires Servier, already markets the combination under the trade name Coveram in 91 countries outside the United States.


Perindopril and amlodipine each target different cardiovascular functions and are, therefore, used in combination to treat high blood pressure, Xoma said. The company bought the rights to Servier’s perindopril franchise in January.


The combination was well tolerated in the trial, and there were no serious adverse events, Xoma said.


Shares of the company rose to $ 2.84 in extended trade. They closed nearly 3 percent higher at $ 2.68 on Tuesday on the Nasdaq.


(Reporting By Vrinda Manocha in Bangalore; Editing by Sriraj Kalluvila)


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Asian shares, euro fall on uncertainty over Greek bailout
















TOKYO (Reuters) – The euro skidded on Wednesday and Asian shares fell after European officials failed to reach a deal on another bailout for Greece, a day after Federal Reserve Chairman Ben Bernanke highlighted the dangers of a U.S. fiscal crisis.


U.S. stock futures eased 0.4 percent, pointing to a weak Wall Street open.













Financial spreadbetters predict London’s FTSE 100 <.FTSE>, Paris’s CAC-40 <.FCHI> and Frankfurt’s DAX <.GDAXI> would open down as much as 0.2 percent, following weakness in Asia. <.L> <.EU> <.N>


The euro slumped 0.5 percent to $ 1.2752, extending losses and retreating from Tuesday’s two-week high of $ 1.28295.


The euro’s decline lifted the dollar up 0.3 percent against a basket of key currencies <.DXY> and weighed on commodities such as gold, which eased 0.3 percent to $ 1,722.70 an ounce.


Euro zone finance ministers and Greece’s international lenders will gather again on Monday. Their meeting in Brussels ended on Wednesday without an agreement on the next tranche of loans to Greece, as they haggled over myriad options on how to bring the country’s debt down to a sustainable level, without which emergency aid cannot be disbursed to Athens.


“The euro is being sold because markets had believed the ministers would agree on aid for Greece at today’s meeting,” said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.


“Instead, a settlement is postponed, highlighting the difficulty of getting consensus on the debt crisis. But I feel this is a typical European political show and an agreement will be reached.”


The bearish news from Europe dragged down Asian shares, whose two-day rise had already been stalled after Bernanke on Tuesday repeated a warning that failure to avoid the $ 600 billion “fiscal cliff” in expiring tax cuts and government spending reductions could lead to recession in the United States.


The Fed chief said worries over how budget negotiations will be resolved were already damaging growth.


Concerns about the United States failing to raise its debt ceiling rattled financial markets in August 2011 and prompted Standard & Poor’s to cut the top-notch U.S. government bond rating for the first time ever.


“The price action suggests market participants are unclear of what to make of recent developments and therefore this warrants some caution,” said Stan Shamu, strategist at IG Markets.


But Hirokazu Yuihama, a senior strategist at Daiwa Securities, said that for all the concerns over the fiscal cliff, most of the market expected the U.S. Congress and White House to reach a compromise to avert the crisis.


MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> slipped 0.2 percent. Hong Kong <.HSI> shares bucked the falling trend but pared earlier gains to rise 0.5 percent while Shanghai shares <.SSEC> inched up 0.3 percent.


Japan’s Nikkei stock average <.N225> closed up 0.9 percent at a two month-high as exporters were buoyed by a weaker yen.


The yen has come under pressure on expectations that a general election on December 16 will result in victory for an opposition leader who wants the Bank of Japan to aggressively ease monetary policy to stem the economy from further deterioration. <.T>


MACRO DATA EYED


Daiwa’s Yuihama said concerns over third-quarter earnings have subsided as most Asian companies had already reported results.


“This has prompted investors to turn to economic fundamentals. Signs of recovery in the U.S. and China are offering some assurances that the global economic slump may not be as severe as previously feared, even if growth remains fragile,” Yuihama said.


Investors will now focus on HSBC China flash PMI for November due on Thursday to see whether a low point for China, the world’s second largest economy, is over. U.S. manufacturing figures are due later on Wednesday while those from Europe are due on Thursday.


Trading activity was slowing ahead of the U.S. Thanksgiving long weekend.


Going into the holiday, the dollar has been underpinned broadly by data indicating a moderate U.S. recovery taking root, while the yen remained under pressure, with more data showing Japan‘s economy struggling.


Japan’s exports fell 6.5 percent in October from a year ago, dropping for a fifth consecutive month, weighed down by weakening global demand and a territorial row with China, its main customer.


In the U.S. on Tuesday, a report showed housing starts rose to the highest rate in more than four years in October.


The dollar rose to a 7-1/2-month high against the yen of 81.975 yen while the euro briefly touched a peak of 105.05 yen, its highest point since May 4.


A retreat in shares dragged oil lower, although prices remained supported by a lack of ceasefire between Israelis and Palestinians, which raised concerns about supply disruptions from the Middle East.


U.S. crude futures pared earlier gains and were up 0.1 percent to $ 86.85 a barrel by midafternoon, and Brent crude also trimmed earlier rises and was up 0.2 percent at $ 110.03.


Weak appetite for riskier assets also interest in Asian credit markets subdued, with the spreads on the iTraxx Asia ex-Japan investment-grade index tightening by 1 basis point.


(Additional reporting by Miranda Maxwell in Melbourne; Editing by Simon Cameron-Moore & Kim Coghill)


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U.S. soldier accused of Iraq shooting “psychotic”: doctor
















TACOMA (Reuters) – A U.S. soldier accused of killing five fellow servicemen at a military combat stress center in Baghdad in 2009 was psychotic and suffered from post-traumatic stress disorder during the shooting frenzy, a top U.S. forensic psychiatrist testified on Tuesday.


Sergeant John Russell, 48, is accused of going on a shooting spree at Camp Liberty, near the Baghdad airport, in an assault the military said at the time could have been triggered by combat stress.













Russell, of the 54th Engineer Battalion based in Bamberg, Germany, faces five charges of premeditated murder, one charge of aggravated assault and one charge of attempted murder in connection with the May 2009 shootings.


Six months ago, he was ordered to stand trial in a military court that has the power to sentence him to death, if he is convicted.


Russell’s civilian attorney, James Culp, entered no plea at an arraignment on Monday at a military base in Washington state. Russell’s court martial is tentatively set for mid-March and could last four to five weeks, attorneys told Reuters on Tuesday.


In a second day of hearings to discuss Russell’s state of mind at the time of the shooting and establish what evidence or testimony to admit at the court martial, Robert Sadoff, a University of Pennsylvania forensic psychiatry expert, gave the opinion that Russell was suffering from post-traumatic stress disorder.


Russell has “dissociative disorder,” or a lack of memory about the shootings, said Sadoff, who examined Russell for a total of 20 hours after the shootings. “He cannot remember. It’s a legitimate disorder. He also has post-traumatic stress disorder.”


Sadoff, a veteran of 10,000 criminal cases added: “It’s a matter of what’s going on in this man’s mind. He was psychotic. He was not dealing with reality. That’s what psychosis is.”


If the defense can persuade a jury that Russell was not in control of his actions, it may be able to argue that he is not legally responsible and could spare him from the death penalty, if convicted.


During Tuesday’s hearing, Culp sought authority from Judge Colonel David Conn to hire a forensic hypnotist to unlock Russell’s buried memories and conduct a specialized magnetic resonance imaging (MRI) test to measure Russell’s “mild diffused brain atrophy”, which Culp argues played a part in his behavior.


This would help diagnose “the extent of brain damage as it relates to criminal responsibility,” Culp said.


Army prosecutors urged the judge to decline. Major Dan Mazzone, one of four Army attorneys prosecuting the case, told the judge that an Army medical review already indicated that Russell’s brain atrophy was typical of a man his age and further testing is an unnecessary expense to the Army.


“The bottom line, this is just not necessary. It’s something the government should not be entitled to fund,” Mazzone said.


The judge is set to rule on the matter over the next few days.


The proceedings, held at Joint Base Lewis-McChord near Tacoma, Washington, come at a sensitive time for the Army, which is in the process of deciding how to prosecute Staff Sergeant Robert Bales, a soldier accused of killing Afghan villagers in cold blood earlier this year.


A two-week hearing at Lewis-McChord to establish if there is sufficient evidence to send Bales to a court martial wrapped up last week after harrowing testimony from Afghan adults and children wounded in the attack.


Bales’ civilian defense lawyers have also suggested he was suffering from post-traumatic stress disorder.


On Monday, Russell’s attorney outlined a defense based on his declining mental state.


Russell suffered from depression, thoughts of suicide, anxiety and stress from multiple deployments, and suffered “at least one traumatic experience involving civilian casualties” and “mass grave sites” while serving in Bosnia and Kosovo during 1998 and 1999, Culp said in presenting arguments to the judge after the arraignment.


(Reporting by Bill Rigby; Editing by Lisa Shumaker)


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Autonomy ‘misled HP on finances’



















HP chief executive Meg Whitman: “We uncovered a whole host of very concerning accounting improprieties”



Computer maker Hewlett Packard has asked US and UK authorities to investigate alleged misrepresentations of Autonomy’s finances before HP took over the UK software group last year.


HP said Autonomy appeared to have “inflated” the value of the company prior to the takeover as part of a “wilful effort to mislead”.


This led to a $ 5bn (£3.1bn) charge in its latest quarterly accounts.


The former management team of Autonomy “flatly rejected” the allegations.


Three former senior members of staff, including former chief executive Mike Lynch, said they were “shocked” to see the statement.


“HP’s due diligence review was intensive,” Autonomy’s former chief executive, chief financial officer and chief operating officer said, referring to the process of investigating a firm prior to purchase.


“It took 10 years to build Autonomy’s industry-leading technology and it is sad to see how it has been mismanaged since its acquisition by HP,” the statement from the former management team said.


During a conference call following the announcement, HP chief executive Meg Whitman said: “We did a whole host of due diligence but when you’re lied to, it’s hard to find.


“[Autonomy] was smaller and less profitable that we had thought,” she said, adding that HP’s investigations suggested that the UK firm had misstated its revenues and growth rate.


Taking into account recent falls in HP’s share value and lower-than-anticipated returns from the merger, the total one-off charge recorded in HP’s accounts for the three months to the end of October was $ 8.8bn, pushing the company to a $ 6.85bn net loss.


‘Questionable accounting’


Continue reading the main story

HP’s allegations… are shocking if true – not least because for years Autonomy was regarded as that rarest and most precious of British companies, a global hi-tech success”



End Quote



HP said during the conference call that “a very senior person” from Autonomy had come forward “with specific details [of accounting misrepresentations]“. That person was still at the company, it said.


Ms Whitman said HP had discovered a number of irregularities, including hardware sales that had been reported as software revenues, which inflated both overall revenues and profit margins.


She said margins of between 40% and 45% had been reported, whereas HP now believed them to be between 20% and 28%.


As well as referring the matter to the regulatory authorities, the company would be “aggressively pursuing individuals responsible for this wrongdoing”, she added.


This would involve trying to recover money for HP shareholders.


HP shares fell 13% in early trading in New York following the announcement.


Deloitte, the accountancy firm which audited Autonomy’s accounts, said it could not comment on the allegations due to client confidentiality, but would cooperate with any investigations.


Criticism


HP completed the takeover of Autonomy for $ 12bn in October last year.


Autonomy was founded by Mike Lynch in 1996 and grew to become one of the largest software companies in the UK.


Mr Lynch is a non-executive director of the BBC, which said in a statement: “We expect to discuss these reports with Dr Lynch imminently.”


Autonomy gained a listing on the US Nasdaq exchange in May 2000, at the height of the technology boom, and was listed in London six months later.


The firm has often been cited as an example of how academic research can be turned into a profitable business, although it has attracted criticism from the City, particularly when, in October 2010, it warned there had been unexpected volatility in its customers’ “purchasing behaviour” and lowered its full-year forecasts.


HP’s decision to buy the company was part of the US firm’s long-term plan to move away from making computers into the more profitable software business.


BBC News – Business



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