By Georgina Prodhan and Paul Sandle
LONDON, April 1 (Reuters) - Hewlett-Packard did not have to buy Britain's Autonomy to solve the U.S. company's other problems in 2011, its former chief executive told the $5 billion fraud trial of Mike Lynch.
Lynch is accused of fraudulently inflating the value of Autonomy, which HP bought for $11.1 billion and then wrote down by $8.8 billion a year later. He argues that HP itself, a "vast but floundering company", botched the acquisition.
Autonomy was a market leader in software for unstructured data, helping companies extract the meaning from emails, video or voice calls, which are hard to analyse in traditional ways.
And Leo Apotheker, architect of the deal and HP's CEO between November 2010 and September 2011, had sought to boost HP's languishing profitability by integrating its legacy computer and printer business with higher-margin software.
But the former CEO of Europe's leading business software group SAP resisted suggestions from Lynch's defence lawyer in London's High Court that the acquisition of Autonomy was central to a desperate strategy.
"Unstructured data was at the centre of your plans," Robert Miles QC, acting for Lynch, told Apotheker, who was called as a witness in the case.
"No, that's not right, it was part of the plan," Apotheker said, adding that HP had considered buying either Autonomy or German group Software AG in the first half of 2011, but decided on the British firm because it would provide the "technological uplift" that HP wanted.
It was not clear cut, Apotheker said:
"Looking at financial markets, investors, I think they would have preferred Software AG," he said.
Apotheker who said in his witness statement that he had "never told the due diligence team to prioritize due diligence of Autonomy's technology over its financials", also rejected the idea that HP was in crisis.
"But it wasn't doing well. I was very unhappy with the results but that doesn't mean the company was about to go under."
HP is suing Lynch, once hailed as Britain's answer to Bill Gates, along with his former finance chief Sushovan Hussain for more than $5 billion. Lynch also faces criminal fraud charges in the United States, which carry a maximum term of 20 years. Hussain has been convicted of fraud in a related U.S. case.
At the opening of the case last week, HP's lawyer Laurence Rabinowitz QC said the U.S. company believed it was buying a fast-growing software firm with no hardware business.
Apotheker recalled that Lynch told him Autonomy was a "very focused" pure software company when they first met in Palo Alton, California, in April 2011.
He said he understood that to mean Autonomy's strategy was driven by "software and software only".
HP argues that covertly selling hardware was one of the ways that Autonomy inflated its revenue, while Lynch's lawyers have said it was commercially justified.
Apotheker was replaced by Meg Whitman, who planned to refocus the company on its core hardware strengths after an outcry from shareholders over the new strategy and a steep decline in HP's share price.
Hewlett Packard Company in 2015 split into two separate publicly traded companies - HP Inc. and Hewlett Packard Enterprise.
Whitman is expected to be called as a witness later in the trial, while Lynch himself is expected to appear around July.
The case is expected to last until the end of the year. (Reporting by Georgina Prodhan and Paul Sandle; Editing by Alexander Smith)