HP’s stock price hit a recent low of under $12 on 21 November 2012. This is a price level the organisation’s shares haven’t been traded at for 10 years, when it acquired Compaq in a bid to establish itself as the key purveyor of PCs.

The rot set in for HP years ago. The start of the trend towards mobile, smartphones and a different client model for computing was one that the Palo Alto company appeared unable to grasp, fixated as it was in selling commoditised PCs and pumping up margins on printer ink. It has struggled to come up with a credible strategy ever since.

Leo Apotheker, the most recent of HP’s ill-fated ex-CEOs, thought he saw a way out. He would junk the emphasis on hardware and recreate the Silicon Valley pioneer as a corporate software company. A series of acquisitions was undertaken to try and meet this aim.

One of Apotheker’s last acquisition before being fired just 11 months into the job was Autonomy, the UK company based on smart searching and matching technologies. It was perhaps seen as a perfect match for data management and searching in the world of big data. Some also saw it as a last desperate act of a CEO who would be gone within weeks.

To any outside observer the price tag paid at the time seemed a big one: $10.3bn for 2700 employees, some good core technologies and a series of software and support contracts with companies acquired by Autonomy? Even HP’s own CFO was against the deal.

But with due diligence executed by KPMG on HP’s behalf, based on Deloitte-supplied Autonomy accounts, what could possibly go wrong? Well now we know. In November, a mud-slinging match started between HP, now headed by former board member and ex-eBay CEO Meg Whitman, and the ex-HP employee (who was fired by Whitman), and founder of Autonomy Mike Lynch.

It started on November 20th with an HP announcement of an $8.8bn impairment charge, claiming “accounting improprieties, misrepresentations and disclosure failures in Autonomy financial statements prior to 2011 acquisition by HP”. $5.5bn of this charge was the direct consequence of a revaluation based on this new information (garnered as the result of a ‘forensic’ review by PricewaterhouseCoopers of historical data). It begs an immediate question: what was KPMG doing when it did its due diligence prior to purchase?

Lynchhas returned fire. Had HP properly understood parts of Autonomy accounts presented using IFRS accounting rules, he asked. Why had HP salespeople favoured other products over Autonomy even after it became part of the HP product range? Why had Whitman not approached him or other members of the Autonomy board prior to their announcement? And so on… Lynch has set up a website, autonomyaccounts.org, in which he responds to the HP announcement robustly. He starts with the words: “I utterly reject all allegations of impropriety.”

So the battle lines are drawn. And with no further hard facts to draw upon, it is impossible to establish what the accusation is based upon, or what Lynch’s defence will be.

CIOs who are using Autonomy will probably be asking two fundamental questions. Firstly, will HP stand behind its Autonomy technology and product set? Whitman says yes, but since very little else has been said so far, we need to hear more. If the value of these products has been downgraded, is that going to be reflected in HP’s ongoing approach?

There is an even more fundamental concern. It’s about HP itself. Beyond the wrongs and rights of this spat – and HP will have to substantiate its claims in more detail by the end of the year – by inference, HP failed to take due care in this acquisition, and its current CEO is one of the board members who signed off on the acquisition. So the portion of the write-off attributed by HP to a drop in stock price could just as easily be linked to endemic failures by HP management and its agents KPMG. Sure enough there is already a class action being led by HP shareholders against HP board members past and present, KPMG and Deloitte.

This is a story that has some distance to run. It would be sad to see the end of the iconic company that Bill Hewlett and Dave Packard created in a garage and ran for decades, but it is impossible to feel so sentimental about more recent incarnations of HP, wracked with indecision, boardroom wrangling and a lack of strategic clarity.

Who is to blame for HP’s £5.5bn writedown of Autonomy?