DealBook: Hewlett’s Loss: A Folly Unfolds, by the Numbers

For Hewlett-Packard, the alarm bells started ringing less than a year after the technology company bought a British software maker for $11.1 billion.

Unhappy with the business’s sagging performance, H.P. ousted the software company’s mercurial Cambridge-educated founder and sent a team to England to review its books last May. It was then that a senior finance official at the British company stepped forward, raising questions about the accuracy of the numbers.

Months of investigation followed, prompting Hewlett’s accusations on Tuesday that the British software maker, Autonomy, had engaged in “serious accounting improprieties.” Before the deal, H.P. claimed, Autonomy inflated its sales. The problems went undetected by outside accountants — both Autonomy’s auditors and a firm H.P. hired to vet the deal.

The accounting issues at Autonomy, which sells software that examines data for patterns, cost Hewlett more than $5 billion.

Now, the Autonomy matter has been referred to regulators in two countries, and the Federal Bureau of Investigation has opened a case, according to people briefed on the matter who were not authorized to speak publicly. H.P. is also considering its own legal action. “This took time” to uncover, said Meg Whitman, H.P.’s chief executive. The issues, she said, “were designed to be hidden.”

Hewlett can’t escape the onslaught of bad news.

In recent years, what was once a giant of Silicon Valley has been buffeted by management turnover, board controversy and waning profits. The company, which previously rivaled the likes of I.B.M., Cisco and SAP, has watched the value of its stock erode sharply.

Even before the accounting problems, the Autonomy acquisition looked troubled. Within weeks, the deal contributed to the downfall of the chief executive at H.P. and led to squabbles among company’s directors, including Ms. Whitman, who took over in September 2011.

In the latest quarter, the company reported a $6.9 billion loss, dragged down by the Autonomy mess and continuing problems in the business that resulted in an overall charge of $8.8 billion. On Tuesday, the stock continued falling, dropping 12 percent to less than $12, its lowest point since 2002. “We intend to be very aggressive in recovering value for our shareholders,” said John Schultz, H.P.’s chief counsel. Individuals will be examined as well as accounting firms, he said, adding, “we’re not limiting it to Autonomy.”

Autonomy’s founder, Mike Lynch, rejected Hewlett-Packard’s claims, denying that his former company committed any accounting chicanery or misled anyone about its financial information. He indicated that the company’s practices were in line with international accounting standards. “It’s completely and utterly wrong,” Mr. Lynch said.

The deal was criticized at the outset.

In August 2011, H.P.’s chief executive at the time, Léo Apotheker, shifted strategy unexpectedly. All in the same announcement, Mr. Apotheker disclosed plans to buy Autonomy, killed two major products and publicly mused about selling the company’s personal computing business.

While many Wall Street analysts said H.P. was overpaying for Autonomy, Mr. Apotheker believed that H.P., which sells printers and computer servers as well as PCs, needed to move more aggressively into software. In buying Autonomy, he was buying into one of the biggest trends in tech, the analysis of voluminous data.

Autonomy specializes in finding patterns among so-called unstructured data, like e-mails, online video, or web surfing. Mr. Lynch is a Cambridge-trained Ph.D. in signal processing who previously founded a company that searched for fingerprint patterns. He made a reported $800 million from the sale of Autonomy. A brilliant man known for a brutish office manner, he bonded with Mr. Apotheker, a multilingual German software executive.

But within weeks of striking the deal, Mr. Apotheker was out, and Ms. Whitman was named to the top spot. During the deal negotiations, she had complained about the Autonomy price to other board members, according to several people briefed on the matter. Mr. Lynch’s other close ally at H.P. during the sale of Autonomy, a chief technology officer named Shane Robison, left H.P. toward the end of 2011.

Early in her tenure, Ms. Whitman resolved to increase Autonomy’s customer base with existing H.P. clients, and to look for ways to put the software inside H.P. products. Ms. Whitman and other executives gushed about the opportunities, describing ways Autonomy’s number-crunching technology could take on I.B.M. in data analysis, and Amazon.com in cloud computing services.

Behind the scenes, the situation was less sunny.

After securing the deal, Mr. Lynch tried to keep Autonomy far from H.P.’s bureaucracy. He mostly worked in London, and initially kept Autonomy’s main office in a San Francisco high-rise decorated with pictures of famous theoretical mathematicians, and not at H.P.’s Palo Alto headquarters.

“He told his people, Meg, anyone who’d listen, that H.P. should not get involved with Autonomy,” said an executive who worked with both companies who asked not to be named to preserve professional relations. “Meg figured we should leave them alone, so they could stay entrepreneurial.”

The lack of cooperation between the two companies quickly became evident. At a going-away party, an H.P. lawyer presented Mr. Lynch with a sweatshirt with the word “integration” and a line through it.

Autonomy, too, was facing challenges after years of fast growth but poor customer relations, according to Leslie Owens, an analyst with Forrester Research. “They didn’t invest in R&D; they didn’t have regular software releases; they weren’t transparent with a road map of where they were going; they didn’t seek customer feedback,” she said. “Customers complained, but the promise of managing all their information and making better decisions was so attractive. They bought more.”

Soon after the H.P. acquisition, Ms. Owens said, Autonomy announced a new version of its core product. “We asked for a demo,” she said, and “we’re still waiting.”

Sales plummeted soon after Autonomy became part of H.P. Ms. Whitman said she initially thought this was because of Mr. Lynch’s lack of experience running a big company. In hindsight, however, she ascribed it to Autonomy conforming to H.P.’s rules.

According to H.P., Autonomy sold hardware like servers, but the company booked these as software sales in some instances, thus underplaying expenses and inflating the margins. “They used low-end hardware sales, but put out that it was a pure software company,” said Mr. Schultz. Computer hardware typically has a much smaller profit margin than software. “They put this into their growth calculation.”

An H.P. official, who spoke on the condition of anonymity because of continuing inquiries by regulators, said the hardware was sold at a 10 percent loss. But the loss was disguised as a marketing expense.

The amount registered as a marketing expense appeared to increase over time, the official said. This was notable, because H.P. was reviewing a period in which Mr. Lynch appeared to be shopping Autonomy to H.P. and other companies.

“It was a willful effort by some company executives to mislead investors and potential buyers,” Ms. Whitman said.

H.P. also contended that Autonomy relied on value-added resellers, middlemen who sold software on behalf of the company. Those middlemen, which the H.P. official characterized as “small companies that relied on Autonomy products for the majority of their sales,” reported sales to customers that didn’t actually exist.

H.P. also claimed that Autonomy was taking licensing revenue upfront, before receiving the money. That improper assignment of sales inflated the company’s gross profit margins.

H.P. said it discovered the problems only after Mr. Lynch’s departure. Soon after he was fired, several senior Autonomy executives also resigned from H.P. Mr. Lynch said he has started another company, and expected these executives to join him.

Now, H.P. is dealing with the fallout. Last week, H.P. passed along its findings to the Securities and Exchange Commission and the Serious Fraud Office in Britain.

The problems complicate an already difficult turnaround effort, as Hewlett-Packard continues to face weakness in its core businesses. Revenue for the full fiscal year dropped 5 percent, to $120.4 billion, with the personal computer, printing, enterprise and service businesses all losing ground. Earnings dropped 23 percent, to $8 billion, over the same period.

“I knew H.P. was going to be a challenge,” said Ms. Whitman. “I’ve been around long enough to know you have to play the hand you’re dealt.”

Ben Protess contributed reporting.

A version of this article appeared in print on 11/21/2012, on page A1 of the NewYork edition with the headline: Hewlett’s Loss: A Folly Unfolds, By the Numbers.

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The New Old Age Blog: Patience, Consciousness and White Lies

My wife and I are blessed with having three “semi-independent” parents in their mid-80s living within a few blocks of us. Our children grew up knowing their grandparents as integral parts of our nuclear family, within walking distance for most of their childhoods. But now that our nest is empty, we find ourselves reliving many of the parenting issues we faced when our children were little — now in geriatric versions, at close range. As it turns out, parenting was good practice for the issues we face with our own parents.

What exactly does semi-independence mean as applied to elderly parents? Among our three, we have two canes, five walkers, one wheelchair (for long walks), four artificial joints, a pacemaker, four hearing aids and a knee brace. The list of medical conditions is long, and the list of medications even longer, requiring different color pill box organizers for morning, afternoon and evening.

Our parents all live in the same homes they have been in for many years. Keeping them safe and healthy there, as well as when they leave the house, has become a big part of our day-to-day work these days. Therein the yin and yang of parenting has returned — independence versus helicoptering.

Children’s yearning for independence begins in toddlerhood: “I can do it myself!” It escalates through childhood, accelerates with the driver’s license, and crescendos, with pomp and circumstance, at high school graduation.

The urge for independence is seen in all animal species, but relinquishing independence and accepting assistance in old age is unique to humans. For most elderly, it comes with a struggle, reflecting how hardwired our brains are for independence. The thought of getting in-home help is antithetical to our parents’ sense of self worth, exceeded only by the dread of leaving their homes for assisted living facilities. So, as tasks that were once mundane and automatic have become onerous and stressful for them, we attempt to foster autonomy while protecting them from harm, as we did with our children just a few short years ago.

Childproofing – Our home has again become hazardous, as have theirs. Furniture must be rearranged, booster seats placed on chairs to ease standing up, slippery rugs removed, lighting improved, bathrooms accessorized with handles and rails.

Dressing – Body shapes change in childhood and in old age. Our parents’ wardrobes, like those of our children’s before them, need frequent attention to preserve self-esteem. Their unwillingness to part with old clothes turns us into tailors. And, once again, we shop for slip-on sneakers with Velcro ties.

Driving – For our teens, driving was the symbolic liberation from childhood to young adulthood. For our parents, driving is the symbolic resistance to infirmity and old age. Our attempt to wean them from their cars, in precisely the reverse order we used to phase our teens into driving, has been torture for our parents and for us.

Toys – We have filled our parents’ shelves with new toys to help them with everything from opening cartons of milk (I would like a word with whoever designed those plastic pull loops) and zipping their clothes, to opening jars and removing the protective seals from over-the-counter medicines. A “picker-upper” device helps them avoid bending too low, and a key turner gives them leverage to open their door. Large digital clock faces, easy-to-read telephone keypads, and magnifying glasses keep them in touch with the world, and an e-mail printer keeps them in touch with their grandchildren.

Medicating – Filling those plastic pill box organizers with a week’s worth of medicines has become a personal barometer of competence for our parents, yet, as with our children when they were young, we feel compelled to oversee the dosing.

Mobility – Despite numerous falls, it was only with much teeth gnashing (or denture gnashing, as the case may be) that our mothers consented to use canes; more gnashing when canes gave way to walkers. For long walks, we hide the wheelchair half way there and back so the neighbors don’t see.

The more we do for our parents, the more frail and guilty they feel. Our efforts are sometimes resented. Helping them get in and out of the car, or bracing them under the arm as they negotiate a bumpy sidewalk, can be an affront. “I can do it myself!”

Can I ride my bike to tennis practice if I’m really careful crossing Holly Street? Why can’t I take a cab home from the seniors program at the community center? Can I walk to grandma’s by myself this time? Can I take the bus to the supermarket today? Everyone is hanging out at the park after school, can I go? I’ll just walk down the block to the neighbor’s house this afternoon, O.K.?

What wisdom did we gain the first time around to help us now? Patience, consciousness and white lies.

Patience to wait for them to come to the same conclusions we did. Mom, do you think Rosalind would have fallen and broken both wrists if she had been using a walker?

Consciousness about their need for independence as ballast to our need for their well-being. Why don’t you just let us drive you at night for now?

And white lies: I’m going to the supermarket anyway, we can shop together.

The longer we can protect our parents from harm, the more we can share our lives with them and the more joy they can have from their grandchildren. The trick is doing it without hurting them in other ways.

We have been through this before. It was worth it then, and it is worth it now.

Dr. Harley A. Rotbart is professor and vice chairman of pediatrics at the University of Colorado School of Medicine and the author of “No Regrets Parenting.”

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New H.I.V. Cases Falling in Some Poor Nations, but Treatment Still Lags

New infections with H.I.V. have dropped by half in the past decade in 25 poor and middle-income countries, many of them in Africa, the continent hardest hit by AIDS, the United Nations said Tuesday.

The greatest success has been in preventing mothers from infecting their babies, but focusing testing and treatment on high-risk groups like gay men, prostitutes and drug addicts has also paid dividends, said Michel Sidibé, the executive director of the agency U.N.AIDS.

“We are moving from despair to hope,” he said.

Despite the good news from those countries, the agency’s annual report showed that globally, progress is steady but slow. By the usual measure of whether the fight against AIDS is being won, it is still being lost: 2.5 million people became infected last year, while only 1.4 million received lifesaving treatment for the first time.

“There has been tremendous progress over the last decade, but we’re still not at the tipping point,” said Mitchell Warren, the executive director of AVAC, an advocacy group for AIDS prevention. “And the big issue, sadly, is money.”

Some regions, like Southern Africa and the Caribbean, are doing particularly well, while others, like Eastern Europe, Central Asia and the Middle East, are not. Globally, new infections are down 22 percent from 2001, when there were 3.2 million. Among newborns, they fell 40 percent, to 330,000 from 550,000.

The two most important financial forces in the fight, the multinational Global Fund for AIDS, Tuberculosis and Malaria and the domestic President’s Emergency Plan for AIDS Relief, were both created in the early 2000s and last year provided most of the $16.8 billion spent on the disease. But the need will soon be $24 billion a year, the groups said.

“Where is that money going to come from?” Mr. Warren asked.

The number of people living with H.I.V. rose to a new high of 34 million in 2011, while the number of deaths from AIDS was 1.7 million, down from a peak of 2.3 million in 2005. As more people get life-sustaining antiretroviral treatment, the number of people living with H.I.V. grows.

Globally, the number of people on antiretroviral drugs reached 8 million, up from 6.6 million in 2010. However, an additional 7 million are sick enough to need them. The situation is worse for children; 72 percent of those needing pediatric antiretrovirals do not get them.

New infections fell most drastically since 2001 in Southern Africa — by 71 percent in Botswana, 58 percent in Zambia and 41 percent in South Africa, which has the world’s biggest epidemic.

But countries with drops greater than 50 percent were as geographically diverse as Barbados, Cambodia, the Dominican Republic, Ethiopia, India and Papua New Guinea.

The most important factor, Mr. Sidibé said, was not nationwide billboard campaigns to get people to use condoms or abstain from sex. Nor was it male circumcision, a practice becoming more common in Africa.

Rather, it was focusing treatment on high-risk groups. While saving babies is always politically popular, saving gay men, drug addicts and prostitutes is not, so presidents and religious leaders often had to be persuaded to help them. Much of Mr. Sidibé’s nearly four years in his post has been spent doing just that.

Many leaders are now taking “a more targeted, pragmatic approach,” he said, and are “not blocking people from services because of their status.”

Fast-growing epidemics are often found in countries that criminalize behavior. For example, homosexuality is illegal in many Muslim countries in the Middle East and North Africa, so gay and bisexual men, who get many of the new infections, cannot admit being at risk. The epidemics in Eastern Europe and Central Asia are driven by heroin, and in those countries, methadone treatment is sometimes illegal.

Getting people on antiretroviral drugs makes them 96 percent less likely to infect others, studies have found, so treating growing numbers of people with AIDS has also helped prevent new infections.

Ethiopia’s recruitment of 35,000 community health workers, who teach young people how to protect themselves, has also aided in prevention.

Mr. Sidibé acknowledged that persuading rich countries to keep donating money was a struggle. The Global Fund is just now emerging from a year of turbulence with a new executive director, and the American program has come under budget pressures. Also, he noted, many countries like South Africa and China are relying less on donors and are paying their own costs. The number of people on treatment in China jumped 50 percent in a single year.

Mr. Warren’s organization said in a report on Tuesday that the arsenal of prevention methods had expanded greatly since the days when the choice was abstain from sex, be faithful or use condoms. Male circumcision, which cuts infection risk by about 60 percent, a daily prophylactic pill for the uninfected and vaginal microbicides for women are in use or on the horizon, and countries need to use the ones suited to their epidemics, the report concluded.

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Truce in Gaza Is Close, Egyptian Officials Say

JERUSALEM — Diplomatic efforts accelerated on Tuesday to end the deadly confrontation between Israel and Palestinian militants in Gaza, as the United States sent Secretary of State Hillary Rodham Clinton to the Middle East and Egypt’s president and his senior aides expressed confidence that a cease-fire was close. But by late evening there was no word on an agreement.

The diplomatic moves to end the nearly week-old crisis came on a day of some of the most intense violence yet, in what appeared to be efforts by the antagonists to get their last attacks done before a cease-fire goes into effect.

Israeli aerial and naval forces assaulted several Gaza targets in multiple strikes, including a suspected rocket-launching site near Al Shifa hospital, which killed more than a dozen people. Those deaths brought the total number of fatalities in Gaza so far to more than 130 — roughly half of them civilians, the Gaza Health Ministry said.

A delegation visiting from the Arab League canceled a news conference at the hospital because of the Israeli aerial assaults as wailing ambulances brought victims in, some of them decapitated.

Militants in Gaza fired a barrage of rockets into southern Israel, killing an Israeli soldier — the first military casualty on the Israeli side since the hostilities broke out last week. The Israel Defense Forces said the soldier, identified as Yosef Fartuk, 18, died from a rocket strike that hit an area near Gaza. Israeli officials said a civilian military contractor working near the Gaza border was also killed, bringing the total number of fatalities in Israel from the past week of rocket mayhem to five.

Other Palestinian rockets hit the southern Israeli cities of Beersheba and Ashdod, and longer-range rockets were fired at Tel Aviv and Jerusalem, but neither main city was struck and no casualties were reported. One Gaza rocket hit a building in the Israeli city of Rishon Lezion, just south of Tel Aviv, injuring one person and wrecking the top three floors.

Senior Egyptian officials in Cairo said Israel and Hamas, the militant Islamist group that governs Gaza, were “very close” to a cease-fire agreement that could be announced within hours. “We have not received final approval but I hope to receive it any moment,” said Essam el-Haddad, President Mohamed Morsi’s top foreign affairs adviser.

Foreign diplomats who were briefed on the outlines of a tentative agreement said it had been structured in stages — first, an announcement of a cease-fire, followed by its implementation for 48 hours. That would allow time for Mrs. Clinton to involve herself in the process on the ground here and create a window for negotiators to agree on conditions for a longer-term cessation of hostilities.

By late evening, however, there was no word on an announcement, and Israeli television was saying the talks needed more time. In Cairo, Egyptian news reports quoted Hamas officials as blaming Israel for delaying a deal and an announcement was unlikely before Wednesday.

The announcement of Mrs. Clinton’s active role in efforts to defuse the crisis added a strong new dimension to the multinational push to avert a new Middle East war. Israel has amassed thousands of soldiers on the border with Gaza and has threatened to invade the crowded Palestinian enclave for the second time in four years to stop the persistent rockets that have been lobbed at Israel.

Mrs. Clinton, who accompanied President Obama on his three-country Asia trip, left Cambodia on her own plane immediately for the Israel, and upon arrival in the late evening went into immediate talks with Prime Minister Benjamin Netanyahu.

She was scheduled to visit the West Bank later to meet with Palestinian leaders and then go to Cairo to consult with Egyptian officials.

Mr. Obama made a number of late-night phone calls from his Asian tour to the Middle East on Monday night that contributed to his conclusion that he had to become more engaged and that Mrs. Clinton might be able to accomplish something.

With Ban Ki-moon, the United Nations secretary general, also in Israel on Tuesday, a senior official in Prime Minister Benjamin Netanyahu’s office said Israel had decided to give more time to diplomacy before starting a ground invasion into Gaza. But Israel has not withdrawn other options.

“I prefer a diplomatic solution,” Mr. Netanyahu said in a statement at the start of a meeting in Jerusalem with the German foreign minister, Guido Westerwelle. “I hope that we can get one, but if not, we have every right to defend ourselves with other means and we shall use them.

Isabel Kershner reported from Jerusalem; Peter Baker from Phnom Penh, Cambodia; and Rick Gladstone from New York. Reporting was contributed by Jodi Rudoren and Fares Akram from Gaza City, David D. Kirkpatrick from Cairo, Ethan Bronner from Jerusalem and David E. Sanger from Washington.

This article has been revised to reflect the following correction:

Correction: November 20, 2012

Because of an editing error, an earlier version of this article misspelled the family name of the Israeli soldier who was killed in a Palestinian rocket attack on Tuesday. He is Yosef Fartuk, not Yosef Faruk. 

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DealBook: Hewlett-Packard Takes $8.8 Billion Charge

Hewlett-Packard said on Tuesday that it had taken an $8.8 billion accounting charge, after discovering “serious accounting improprieties” and “outright misrepresentations” at Autonomy, a British software maker that it bought for $10 billion last year.

It is a major setback for H.P., which has been struggling to turn around its operations and remake its business.

The charge essentially wiped out its profit. In the latest quarter, H.P. reported a net loss of $6.9 billion, compared with a $200 million profit in the period a year earlier. The company said the improprieties and misrepresentations took place just before the acquisition, and accounted for the majority of the charges in the quarter, more than $5 billion.

Shares in H.P. plummeted nearly 11 percent in early afternoon trading on Tuesday, to less than $12.

Hewlett-Packard bought Autonomy in the summer of 2011 in an attempt to bolster its presence in the enterprise software market and catch up with rivals like I.B.M. The takeover was the brainchild of Léo Apotheker, H.P.’s chief executive at the time, and was criticized within Silicon Valley as a hugely expensive blunder.

Mr. Apotheker resigned a month later. The management shake-up came about one year after Mark Hurd was forced to step down as the head of H.P. after questions were raised about his relationship with a female contract employee.

“I’m both stunned and disappointed to learn of Autonomy’s alleged accounting improprieties,” Mr. Apotheker said in a statement. “The developments are a shock to the many who believed in the company, myself included. ”

Since then, H.P. has tried to revive the company and to move past the controversies. Last year, Meg Whitman, a former head of eBay, took over as chief executive and began rethinking the product lineup and global marketing strategy.

But the efforts have been slow to take hold.

In the previous fiscal quarter, the company announced that it would take an $8 billion charge related to its 2008 acquisition of Electronic Data Systems, as well as added costs related to layoffs. Then Ms. Whitman told Wall Street analysts in October that revenue and profit would be significantly lower, adding that it would take several years to complete a turnaround.

“We have much more work to do,” Ms. Whitman said at the time.

Hewlett-Packard continues to face weakness in its core businesses. Revenue for the full fiscal year dropped 5 percent, to $120.4 billion, with the personal computer, printing, enterprise and service businesses all losing ground. Earnings dropped 23 percent, to $8 billion, over the same period.

“As we discussed during our securities analyst meeting last month, fiscal 2012 was the first year in a multiyear journey to turn H.P. around,” Ms. Whitman said in a statement. “We’re starting to see progress in key areas, such as new product releases and customer wins.”

The strategic troubles have weighed on the stock. Shares of H.P. have dropped to less than $12 from nearly $30 at their high this year.

The latest developments could present another setback for Ms. Whitman’s efforts.

When the company assessed Autonomy before the acquisitions, the financial results appeared to pass muster. Ms. Whitman said H.P.’s board at the time – which remains the same now, except for the addition of the activist investor Ralph V. Whitworth – relied on Deloitte’s auditing of Autonomy’s financial statements. As part of the due diligence process for the deal, H.P. also hired KPMG to audit Deloitte’s work.

Neither Deloitte nor KPMG caught the accounting discrepancies. Deloitte said in a statement that it could not comment on the matter, citing client confidentiality. “We will cooperate with the relevant authorities with any investigations into these allegations,” the accounting firm said.

Hewlett-Packard said it first began looking into potential accounting problems in the spring, after a senior Autonomy executive came forward. H.P. then hired a third-party forensic accounting firm, PricewaterhouseCoopers, to conduct an investigation covering Autonomy sales between the third quarter 2009 and the second quarter 2011, just before the acquisition.

The company said it discovered several accounting irregularities, which disguised Autonomy’s actual costs and the nature of the its products. Autonomy makes software that finds patterns, data that is used by companies and governments.

H.P. said that Autonomy, in some instances, sold hardware like servers, which has higher associated costs. But the company booked these as software sales. It had the effect of underplaying the company’s expenses and inflating the margins.

“They used low-end hardware sales, but put out that it was a pure software company,” said John Schultz, the general counsel of H.P. Computer hardware typically has a much smaller profit margin than software. “They put this into their growth calculation.”

An H.P. official, who spoke on background because of ongoing inquiries by regulators, said the hardware was sold at a 10 percent loss. The loss was disguised as a marketing expense, and the amount registered as a marketing expense appeared to increase over time, the official said.

H.P. also contends that Autonomy relied on value-added resellers, middlemen who sold software on behalf of the company. Those middlemen reported sales to customers that didn’t actually exist, according to H.P.

H.P. also claims that that Autonomy was taking licensing revenue upfront, before receiving the money. That improper assignment of sales inflated the company’s gross profit margins.pfront, before receiving the money. It had the effect, the company said, of significantly bolstering Autonomy’s gross margin.

Hewlett Packard turned over its findings to Securities and Exchange Commission in the United States and the Serious Fraud Office in Britain with the last week. In a conference call with analysts, Ms. Whitman said the company might consider legal actions against several parties.

The former management team of Autonomy, which includes the company’s founder Mike Lynch, rejected H.P. claims about the accounting issues.

“H.P. has made a series of allegations against some unspecified former members of Autonomy Corporation PLC’s senior management team. The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false,” the group said in a statement. “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 H.P.”

While Mr. Schultz would not detail H.P.’s future legal strategy, he said “we intend to be aggressive in recovering value for our shareholders.” In addition to Mr. Lynch, the company indicated this could include other individuals, including perhaps former senior executives of H.P. who missed the bad accounting. “We’re not limiting it to Autonomy,” Mr. Shulz said.

H.P. also underscored the importance of Autonomy to the broader strategy, emphasized the quality of the products. “This is a very healthy company with good products that exist,” said Mr. Shultz. “At its core, these are very good products.”

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Responding to Illnesses Manifesting Amid Recovery From Storm

Nicole Bengiveno/The New York Times

Dr. Aaron Gardener, center, attended to a patient at an ad hoc medical unit in Long Beach, N.Y. Many people have coughs, rashes and other ailments.

Day and night, victims of Hurricane Sandy have been streaming into ad hoc emergency rooms and relief centers, like the MASH-type medical unit on an athletic field in Long Beach, and the warming tent in the Rockaways the size of a small high school gym.

They complain of rashes, asthma and coughing. They need tetanus shots because — house-proud and armed with survivalist instincts — they have been ripping out waterlogged boards and getting poked by rusty nails. Those with back pain from sifting through debris receive muscle relaxants; those with chest pain from overexertion are hooked up to cardiac monitors.

“I’ve been coughing,” said Gabriel McAuley, 46, who has been working 16-hour days gutting homes and hauling debris in the Rockaways since the storm hit. “I’ve never felt a cough like that before. It’s deeper down.”

It is impossible to say how many people have been sickened by what Hurricane Sandy left behind: mold from damp drywall; spills from oil tanks; sewage from floodwater and unflushable toilets; tons upon tons of debris and dust. But interviews with hurricane victims, recovery workers, health officials and medical experts over the last week reveal that some of the illnesses that they feared would occur, based on the toxic substances unleashed by the storm and the experience of other disasters, notably Hurricane Katrina, have begun to manifest themselves.

Emergency rooms and poison control centers have reported cases of carbon monoxide exposure — and in New Jersey, several deaths have been attributed to it — from the misuse of generators to provide power and stoves to provide heat.

In Livingston, N.J., the Burn Center at St. Barnabas Medical Center had 16 burn cases over about six days, three times as many as usual, from people trying to dispel the cold and darkness with boiling water, gasoline, candles and lighter fluid.

Raw sewage spilled into homes in Baldwin and East Rockaway, in Nassau County, when a sewage plant shut down because of the surge and the system could not handle the backup. Sewage also spilled from a huge plant in Newark. “We tried to limit our presence in the house because the stink was horrible,” said Jennifer Ayres, 34, of Baldwin, who has been staying temporarily in West Hempstead. She said that she felt ill for several days, that her son had a scratchy throat, and that her mother, who lives in the house, had difficulty breathing, all problems she attributed to the two days they spent inside their house cleaning up last week. “I had stomach problems. I felt itchy beyond itchy on my face.”

Coughing — locally known as the Rockaway cough — is a common symptom that health officials said could come from mold, or from the haze of dust and sand kicked up by the storm and demolitions. The air in the Rockaways is so full of particles that the traffic police wear masks — though many recovery workers do not, worrying people who recall the fallout of another disaster.

“It’s just like 9/11,” said Kathy Smilardi, sitting inside the skeleton of her gutted home in Broad Channel, wrapped in a white puffy jacket, her breath visible in the afternoon cold. “Everyone runs in to clean up, and they’re not wearing masks. Are we going to wait 20 years to figure out that people are dying?”

Health officials and experts say the risks are real, but are cautioning against hysteria. Some coughing could be due to cold, damp weather. Lasting health effects from mold, dust and other environmental hazards generally require long-term, continuous exposure, they said. And the short-term effects can be mitigated by taking precautions like wearing masks, gloves and boots and removing mold-infested wallboard. “The reality is that cleaning up both muck and sewage and spills and removing walls and reconstruction and dealing with debris all do in fact pose concerns,” Daniel Kass, New York City’s deputy commissioner for environmental health, said Friday. “Are they vast or uncontrollable? No. But they depend on people doing work correctly and taking basic precautions.”

The Katrina cough was found to be temporary, said Roy J. Rando, a professor at Tulane’s School of Public Health and Tropical Medicine. Felicia Rabito, an epidemiologist at the school, said that healthy children exposed to mold after Hurricane Katrina showed no lasting respiratory symptoms when they moved back to new or renovated homes.

Immediately after Hurricane Katrina, lead levels in New Orleans’s soil dropped after the top layers of dirt, where lead from paint and gasoline can accumulate, were washed away. But in the two years afterward, soil testing found extremely high lead levels, Dr. Rabito said, which she theorized came from renovating old homes. “That’s a cautionary tale,” she said. Lead in soil can be tracked into homes and pose a health hazard to children playing inside or outside.

Though at least one outbreak of norovirus, a contagious gastrointestinal virus, occurred in a Brooklyn high school that was used as a shelter, New York and New Jersey health officials said they had not seen any significant spike in respiratory or gastrointestinal diseases related to the storm.

In Broad Channel, most homes on Noel Road, where Ms. Smilardi lives, have outdoor oil tanks that were overturned by the storm. The innards of many homes, built when asbestos was used, lie spilled among major and minor roads.

Ominous red spots covered both sides of Paul Nowinski’s burly torso. After the storm, Mr. Nowinski, a musician, waded into the basement of his childhood home on Beach 146th Street in the Rockaways to try to salvage records, books and instruments. He was up to his chest in water, which he thinks might have been contaminated with sewage. He said that he did not know the cause of the red marks; and that he had been too busy “schlepping” to go to the doctor.

Angela Macropoulos contributed reporting.

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Responding to Illnesses Manifesting Amid Recovery From Storm

Nicole Bengiveno/The New York Times

Dr. Aaron Gardener, center, attended to a patient at an ad hoc medical unit in Long Beach, N.Y. Many people have coughs, rashes and other ailments.

Day and night, victims of Hurricane Sandy have been streaming into ad hoc emergency rooms and relief centers, like the MASH-type medical unit on an athletic field in Long Beach, and the warming tent in the Rockaways the size of a small high school gym.

They complain of rashes, asthma and coughing. They need tetanus shots because — house-proud and armed with survivalist instincts — they have been ripping out waterlogged boards and getting poked by rusty nails. Those with back pain from sifting through debris receive muscle relaxants; those with chest pain from overexertion are hooked up to cardiac monitors.

“I’ve been coughing,” said Gabriel McAuley, 46, who has been working 16-hour days gutting homes and hauling debris in the Rockaways since the storm hit. “I’ve never felt a cough like that before. It’s deeper down.”

It is impossible to say how many people have been sickened by what Hurricane Sandy left behind: mold from damp drywall; spills from oil tanks; sewage from floodwater and unflushable toilets; tons upon tons of debris and dust. But interviews with hurricane victims, recovery workers, health officials and medical experts over the last week reveal that some of the illnesses that they feared would occur, based on the toxic substances unleashed by the storm and the experience of other disasters, notably Hurricane Katrina, have begun to manifest themselves.

Emergency rooms and poison control centers have reported cases of carbon monoxide exposure — and in New Jersey, several deaths have been attributed to it — from the misuse of generators to provide power and stoves to provide heat.

In Livingston, N.J., the Burn Center at St. Barnabas Medical Center had 16 burn cases over about six days, three times as many as usual, from people trying to dispel the cold and darkness with boiling water, gasoline, candles and lighter fluid.

Raw sewage spilled into homes in Baldwin and East Rockaway, in Nassau County, when a sewage plant shut down because of the surge and the system could not handle the backup. Sewage also spilled from a huge plant in Newark. “We tried to limit our presence in the house because the stink was horrible,” said Jennifer Ayres, 34, of Baldwin, who has been staying temporarily in West Hempstead. She said that she felt ill for several days, that her son had a scratchy throat, and that her mother, who lives in the house, had difficulty breathing, all problems she attributed to the two days they spent inside their house cleaning up last week. “I had stomach problems. I felt itchy beyond itchy on my face.”

Coughing — locally known as the Rockaway cough — is a common symptom that health officials said could come from mold, or from the haze of dust and sand kicked up by the storm and demolitions. The air in the Rockaways is so full of particles that the traffic police wear masks — though many recovery workers do not, worrying people who recall the fallout of another disaster.

“It’s just like 9/11,” said Kathy Smilardi, sitting inside the skeleton of her gutted home in Broad Channel, wrapped in a white puffy jacket, her breath visible in the afternoon cold. “Everyone runs in to clean up, and they’re not wearing masks. Are we going to wait 20 years to figure out that people are dying?”

Health officials and experts say the risks are real, but are cautioning against hysteria. Some coughing could be due to cold, damp weather. Lasting health effects from mold, dust and other environmental hazards generally require long-term, continuous exposure, they said. And the short-term effects can be mitigated by taking precautions like wearing masks, gloves and boots and removing mold-infested wallboard. “The reality is that cleaning up both muck and sewage and spills and removing walls and reconstruction and dealing with debris all do in fact pose concerns,” Daniel Kass, New York City’s deputy commissioner for environmental health, said Friday. “Are they vast or uncontrollable? No. But they depend on people doing work correctly and taking basic precautions.”

The Katrina cough was found to be temporary, said Roy J. Rando, a professor at Tulane’s School of Public Health and Tropical Medicine. Felicia Rabito, an epidemiologist at the school, said that healthy children exposed to mold after Hurricane Katrina showed no lasting respiratory symptoms when they moved back to new or renovated homes.

Immediately after Hurricane Katrina, lead levels in New Orleans’s soil dropped after the top layers of dirt, where lead from paint and gasoline can accumulate, were washed away. But in the two years afterward, soil testing found extremely high lead levels, Dr. Rabito said, which she theorized came from renovating old homes. “That’s a cautionary tale,” she said. Lead in soil can be tracked into homes and pose a health hazard to children playing inside or outside.

Though at least one outbreak of norovirus, a contagious gastrointestinal virus, occurred in a Brooklyn high school that was used as a shelter, New York and New Jersey health officials said they had not seen any significant spike in respiratory or gastrointestinal diseases related to the storm.

In Broad Channel, most homes on Noel Road, where Ms. Smilardi lives, have outdoor oil tanks that were overturned by the storm. The innards of many homes, built when asbestos was used, lie spilled among major and minor roads.

Ominous red spots covered both sides of Paul Nowinski’s burly torso. After the storm, Mr. Nowinski, a musician, waded into the basement of his childhood home on Beach 146th Street in the Rockaways to try to salvage records, books and instruments. He was up to his chest in water, which he thinks might have been contaminated with sewage. He said that he did not know the cause of the red marks; and that he had been too busy “schlepping” to go to the doctor.

Angela Macropoulos contributed reporting.

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DealBook: Hewlett-Packard Takes $8.8 Billion Charge

Hewlett-Packard said on Tuesday that it had taken an $8.8 billion accounting charge, after discovering “serious accounting improprieties” and “outright misrepresentations” at Autonomy, a British software maker that it bought for $10 billion last year.

It is a major setback for H.P., which has been struggling to turn around its operations and remake its business.

The charge essentially wiped out its profit. In the latest quarter, H.P. reported a net loss of $6.9 billion, compared with a $200 million profit in the period a year earlier. The company said the improprieties and misrepresentations took place just before the acquisition, and accounted for the majority of the charges in the quarter, more than $5 billion.

Shares in H.P. plummeted nearly 11 percent in early afternoon trading on Tuesday, to less than $12.

Hewlett-Packard bought Autonomy in the summer of 2011 in an attempt to bolster its presence in the enterprise software market and catch up with rivals like I.B.M. The takeover was the brainchild of Léo Apotheker, H.P.’s chief executive at the time, and was criticized within Silicon Valley as a hugely expensive blunder.

Mr. Apotheker resigned a month later. The management shake-up came about one year after Mark Hurd was forced to step down as the head of H.P. after questions were raised about his relationship with a female contract employee.

“I’m both stunned and disappointed to learn of Autonomy’s alleged accounting improprieties,” Mr. Apotheker said in a statement. “The developments are a shock to the many who believed in the company, myself included. ”

Since then, H.P. has tried to revive the company and to move past the controversies. Last year, Meg Whitman, a former head of eBay, took over as chief executive and began rethinking the product lineup and global marketing strategy.

But the efforts have been slow to take hold.

In the previous fiscal quarter, the company announced that it would take an $8 billion charge related to its 2008 acquisition of Electronic Data Systems, as well as added costs related to layoffs. Then Ms. Whitman told Wall Street analysts in October that revenue and profit would be significantly lower, adding that it would take several years to complete a turnaround.

“We have much more work to do,” Ms. Whitman said at the time.

Hewlett-Packard continues to face weakness in its core businesses. Revenue for the full fiscal year dropped 5 percent, to $120.4 billion, with the personal computer, printing, enterprise and service businesses all losing ground. Earnings dropped 23 percent, to $8 billion, over the same period.

“As we discussed during our securities analyst meeting last month, fiscal 2012 was the first year in a multiyear journey to turn H.P. around,” Ms. Whitman said in a statement. “We’re starting to see progress in key areas, such as new product releases and customer wins.”

The strategic troubles have weighed on the stock. Shares of H.P. have dropped to less than $12 from nearly $30 at their high this year.

The latest developments could present another setback for Ms. Whitman’s efforts.

When the company assessed Autonomy before the acquisitions, the financial results appeared to pass muster. Ms. Whitman said H.P.’s board at the time – which remains the same now, except for the addition of the activist investor Ralph V. Whitworth – relied on Deloitte’s auditing of Autonomy’s financial statements. As part of the due diligence process for the deal, H.P. also hired KPMG to audit Deloitte’s work.

Neither Deloitte nor KPMG caught the accounting discrepancies. Deloitte said in a statement that it could not comment on the matter, citing client confidentiality. “We will cooperate with the relevant authorities with any investigations into these allegations,” the accounting firm said.

Hewlett-Packard said it first began looking into potential accounting problems in the spring, after a senior Autonomy executive came forward. H.P. then hired a third-party forensic accounting firm, PricewaterhouseCoopers, to conduct an investigation covering Autonomy sales between the third quarter 2009 and the second quarter 2011, just before the acquisition.

The company said it discovered several accounting irregularities, which disguised Autonomy’s actual costs and the nature of the its products. Autonomy makes software that finds patterns, data that is used by companies and governments.

H.P. said that Autonomy, in some instances, sold hardware like servers, which has higher associated costs. But the company booked these as software sales. It had the effect of underplaying the company’s expenses and inflating the margins.

“They used low-end hardware sales, but put out that it was a pure software company,” said John Schultz, the general counsel of H.P. Computer hardware typically has a much smaller profit margin than software. “They put this into their growth calculation.”

An H.P. official, who spoke on background because of ongoing inquiries by regulators, said the hardware was sold at a 10 percent loss. The loss was disguised as a marketing expense, and the amount registered as a marketing expense appeared to increase over time, the official said.

H.P. also contends that Autonomy relied on value-added resellers, middlemen who sold software on behalf of the company. Those middlemen reported sales to customers that didn’t actually exist, according to H.P.

H.P. also claims that that Autonomy was taking licensing revenue upfront, before receiving the money. That improper assignment of sales inflated the company’s gross profit margins.pfront, before receiving the money. It had the effect, the company said, of significantly bolstering Autonomy’s gross margin.

Hewlett Packard turned over its findings to Securities and Exchange Commission in the United States and the Serious Fraud Office in Britain with the last week. In a conference call with analysts, Ms. Whitman said the company might consider legal actions against several parties.

The former management team of Autonomy, which includes the company’s founder Mike Lynch, rejected H.P. claims about the accounting issues.

“H.P. has made a series of allegations against some unspecified former members of Autonomy Corporation PLC’s senior management team. The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false,” the group said in a statement. “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 H.P.”

While Mr. Schultz would not detail H.P.’s future legal strategy, he said “we intend to be aggressive in recovering value for our shareholders.” In addition to Mr. Lynch, the company indicated this could include other individuals, including perhaps former senior executives of H.P. who missed the bad accounting. “We’re not limiting it to Autonomy,” Mr. Shulz said.

H.P. also underscored the importance of Autonomy to the broader strategy, emphasized the quality of the products. “This is a very healthy company with good products that exist,” said Mr. Shultz. “At its core, these are very good products.”

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Hamas Leader Dares Israel to Invade Amid Gaza Airstrikes

GAZA CITY — The top leader of Hamas dared Israel on Monday to launch a ground invasion of Gaza and dismissed diplomatic efforts to broker a cease-fire in the six-day-old conflict, as the Israeli military conducted a new wave of deadly airstrikes on the besieged Palestinian enclave, including a second hit on a 15-story building that houses media outlets. A volley of rockets fired from Gaza into southern Israel included one that hit a vacant school.

Speaking at a news conference in Cairo, where the diplomatic efforts were under way, the Hamas leader, Khaled Meshal, suggested that the Israeli infantry mobilization on the border with Gaza was a bluff on the part of Prime Minister Benjamin Netanyahu of Israel.

“If you wanted to launch it, you would have done it,” Mr. Meshal told reporters. He accused Israel of using the invasion threat as an attempt to “dictate its own terms and force us into silence.”

Rejecting Israel’s contention that Hamas had precipitated the conflict, Mr. Meshal said the burden was on the Israelis. “The demand of the people of Gaza is meeting their legimitate demands — for Israel to be restrained from its aggression, assassinations and invasions, and for the siege over Gaza to be ended,” he said.

The Hamas Health Ministry said Monday evening that a total of 102 people had been killed since Wednesday morning, when Israeli airstrikes began, following months of Palestinian rocket fire into Israel. A spokeswoman for the Israeli military said she believed that a majority of these were militants, though it is difficult to know because Hamas’s own fighting brigade and the other factional groups are secretive.

The Hamas ministry said that the dead included 24 children, 10 women and 12 men over 50, who were presumably not involved in combat. Of the remaining 56, at least 36 are known militants. Hamas officials said 850 have been wounded, 260 of them children, 140 of them women and 55 men over 50.

Three people have been killed so far in Israel, all civilians, in a rocket strike that hit an apartment house in the southern Israeli town of Kiryat Malachi on Thursday morning. The Israelis have said that at least 79 Israelis have been wounded and that Gaza rockets have reached as far north as Tel Aviv.

The latest Gaza casualties — 19 people reported killed since midnight local time — included Palestinians killed in strikes by warplanes and a drone attack on two men on a motorcycle, the Health Ministry said. Another Israeli drone attack killed the driver of a taxi hired by journalists and displaying “Press” signs, although it was not clear which journalists hired it, Palestinian officials said.

On Sunday, Israeli forces attacked two buildings housing local broadcasters and production companies used by foreign outlets. Israeli officials denied targeting journalists, but on Monday Israeli forces again blasted the Al Sharouk block, a multiuse building where many local broadcasters, as well as Sky News of Britain and the channel Al Arabiya, had offices.

That attack, which struck a computer shop on the third floor, sparked a blaze that sent plumes of dark smoke creeping up the sides of the building. Video footage showed clouds of smoke billowing.

An Israeli bomb pummeled a home deep into the ground here on Sunday, killing 11 people, including nine in three generations of a single family, in the deadliest single strike since the latest conflict began. Members of the family were buried Monday in a rite that turned into a gesture of defiance and became a rally supporting Gaza’s militant Hamas rulers.

A militant leader said Tel Aviv, in the Israeli heartland, would be hit “over and over” and warned Israelis that their leaders were misleading them and would “take them to hell.”

Israel says its onslaught is designed to stop Hamas from launching the rockets, but, after an apparent lull overnight, more missiles hurtled toward targets in Israel, some of them intercepted by Israel’s Iron Dome defense system. Of five rockets fired on Monday at the southern Israeli city of Ashkelon, four were intercepted but one smashed through the concrete roof at the entrance to an empty school. There were no reports of casualties. Other rockets rained on areas along the border with Gaza.

Later a second salvo struck Ashkelon. Several rockets were intercepted, but one crashed down onto a house, causing damage but no casualties. News reports said 75 rockets had been fired by midafternoon.

On Sunday, a new volley of Palestinian rockets totaled nearly 100 by nightfall, including two that soared toward Tel Aviv but were knocked out of the sky by Israeli defenses.

Fares Akram and Jodi Rudoren reported from Gaza City, and Alan Cowell from London. Reporting was contributed by Isabel Kershner from Ashkelon, Israel; Ethan Bronner, Myra Noveck and Irit Pazner Garshowitz from Jerusalem; Rina Castelnuovo from Ashdod, Israel; Peter Baker from Bangkok; and David D. Kirkpatrick from Cairo.

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The iEconomy: As Boom Lures App Creators, Tough Part Is Making a Living

Daniel Rosenbaum for The New York Times

Shawn and Stephanie Grimes’s efforts have cost $200,000 in lost income and savings, but their apps have earned less than $5,000 this year.

ROSEDALE, Md. — Shawn and Stephanie Grimes spent much of the last two years pursuing their dream of doing research and development for Apple, the world’s most successful corporation.

But they did not actually have jobs at Apple. It was freelance work that came with nothing in the way of a regular income, health insurance or retirement plan. Instead, the Grimeses tried to prepare by willingly, even eagerly, throwing overboard just about everything they could.

They sold one of their cars, gave some possessions to relatives and sold others in a yard sale, rented out their six-bedroom house and stayed with family for a while. They even cashed in Mr. Grimes’s 401(k).

“We didn’t lose any sleep over it,” said Mr. Grimes, 32. “I’ll retire when I die.”

The couple’s chosen field is so new it did not even exist a few years ago: writing software applications for mobile devices like the iPhone or iPad. Even as unemployment remained stubbornly high and the economy struggled to emerge from the recession’s shadow, the ranks of computer software engineers, including app writers, increased nearly 8 percent in 2010 to more than a million, according to the latest available government data for that category. These software engineers now outnumber farmers and have almost caught up with lawyers.

Much as the Web set off the dot-com boom 15 years ago, apps have inspired a new class of entrepreneurs. These innovators have turned cellphones and tablets into tools for discovering, organizing and controlling the world, spawning a multibillion-dollar industry virtually overnight. The iPhone and iPad have about 700,000 apps, from Instagram to Angry Birds.

Yet with the American economy yielding few good opportunities in recent years, there is debate about how real, and lasting, the rise in app employment might be.

Despite the rumors of hordes of hip programmers starting million-dollar businesses from their kitchen tables, only a small minority of developers actually make a living by creating their own apps, according to surveys and experts. The Grimeses began their venture with high hopes, but their apps, most of them for toddlers, did not come quickly enough or sell fast enough.

And programming is not a skill that just anyone can learn. While people already employed in tech jobs have added app writing to their résumés, the profession offers few options to most unemployed, underemployed and discouraged workers.

One success story is Ethan Nicholas, who earned more than $1 million in 2009 after writing a game for the iPhone. But he says the app writing world has experienced tectonic shifts since then.

“Can someone drop everything and start writing apps? Sure,” said Mr. Nicholas, 34, who quit his job to write apps after iShoot, an artillery game, became a sensation. “Can they start writing good apps? Not often, no. I got lucky with iShoot, because back then a decent app could still be successful. But competition is fierce nowadays, and decent isn’t good enough.”

The boom in apps comes as economists are debating the changing nature of work, which technology is reshaping at an accelerating speed. The upheaval, in some ways echoing the mechanization of agriculture a century ago, began its latest turbulent phase with the migration of tech manufacturing to places like China. Now service and even white-collar jobs, like file clerks and data entry specialists or office support staff and mechanical drafters, are disappearing.

“Technology is always destroying jobs and always creating jobs, but in recent years the destruction has been happening faster than the creation,” said Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business.

Still, the digital transition is creating enormous wealth and opportunity. Four of the most valuable American companies — Apple, Google, Microsoft and I.B.M. — are rooted in technology. And it was Apple, more than any other company, that set off the app revolution with the iPhone and iPad. Since Apple unleashed the world’s freelance coders to build applications four years ago, it has paid them more than $6.5 billion in royalties.

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