HP's Mad King Léo ignored Autonomy iceberg, emails claim Leo Apotheker of former HP fame ignored warnings from his own board and shareholders about the ill-fated $11.1bn Autonomy acquisition that resulted in a $8.8bn write-down and allegations of accountancy fraud, a cache of internal emails suggests. The messages were filed in a northern California district court at the end of …
The thing I notice about this foxtrot is that all explanations are suspiciously convenient for the people giving them. It's convenient for HP to frame Lynch as a fraudster and Leo as foolhardy, since both are gone; but then so it is for Lynch to claim it was all HP's fault for dropping the ball.
Playing devil's advocate can get very frustrating when you can't tell who's even the devil.
Dunno; Autonomy was an overprice piece of crap deal. HP's main fault here was a combination of terrible due diligence and the C-suite pressing ahead with the deal despite that poor DD showing that Autonomy was a bad acquisition; Lynch's main defense boils down to 'I was selling snake-oil, but it's your fault for not recognizing that it was snake oil!'.
@naselus
Come on, it was not snake oil, it was not that bad ... yes they paid too much, but they have only themselves to blame for that. The autonomy deal should have been disastrous for us, as we compete with autonomy, however, HP failed to push it ... THAT is not autonomy's fault, it is HP's. They now claim that they were defrauded, however, it is down to poor marketing, if you ask me. Also, I assume they lost quite some customers because nobody wants HP as a software provider because they discontinue software products left, right, and center.
Somebody convinced HP lower margins (Hardware) is somehow better ...
>Playing devil's advocate can get very frustrating when you can't tell who's even the devil.
Well, the thing is, when shit hits the fan, we know it came from an a-hole, however, we do not know what caused the a-hole to discharge the quantity nor what caused it to aim at the fan .... there are usually multiple causes to f-up's of this magnitude, so multiple devils.
I am more interested in scapegoats, especially "innocent" ones.
Apotheker apparently said "If financial markets are rational, we should be rewarded by a better P/E multiple as we move toward this objective."
Financial markets are rarely rational c.f. every sodding day.
The lack of due diligence is cited as the reason HP pushed ahead with the ill advised acquisition. From what I can see looking at the published the DD docs it did pick up on problems ahead of the acquisition but HP manglement (primarily Apotheker) were blinded by their own hubris.
" blinded by their own hubris."
Psychological research has confirmed that treating people like royalty (ev en if only in games) causes them to overestimate their abilities and become increasingly unwilling to listen to subordinates. Happened to Blair, is now happening to Cameron, Fred the Shred and many others. At some point, "my" view of things transcends "mere reality."
Yet corporations continue to work on a monarchistic model of corporate governance despite the evidence that this is a terrible way to do things.
Autonomy's finances will have been audited (a UK requirement).
HP will have hired a firm to carry out financial due diligence and to provide advice - to ensure that the audited accounts and other data provided as part of the deal were true.
It's either:
1) Autonomy employees misleading the Autonomy auditors, being very clever and outwitting them
2) Autonomy auditors misleading HP's advisers, being very clever and outwitting them
3) Incompetence by Autonomy auditors
4) Incompetence by HP advisers
5) Incompetence by members of the HP board (if they did not act on advice)
Any further further possibilities ?
> Any further further possibilities ?
6) The Autonomy product was OK, but just not good enough to win worldwide market share, so the rate of sales collapsed.
That would hardly be the first time such a thing has happened in the software business. DB2 versus Oracle, for example. Banyan Vines versus Novell Netware. And hundreds of other examples over the last 50 years.
HP conned themselves in to paying over the odds for Autonomy, even Microsoft walked away from a bid of half as much, and no one knows about destroying value in acquisitions than Microsoft (total write offs with Aquantive and Nokia within a year or so). HP should be grateful write down was only $8bn from $11bn paid, as Microsoft would have lost every last cent.
Microsoft was fighting a losing battle trying to keep Nokia's handset business afloat for years before they bought it outright. It was foolish to throw good money after bad, but at least they really did have a strategic reason -- trying to drive their flagship into a crucial new market.
When HP bought Autonomy for $11 billion, pretty much everyone and their mother said "wtf?" Magical, wishful thinking by the bean counters and advertising managers who had taken over the company by then. The only part that wasn't publicly foreseen by pundits across the industry in 2011 is that they would launch this tawdry PR blitz attacking the people who accepted their purchase price.
Once you let the hairdressers in, a company is toast.
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