back to article HP blasts $5.1bn sueball at ex-Autonomy execs, Lynch preps return fire

As it has long threatened to do, HP has sued two former Autonomy executives, accusing them of impropriety related to the two companies' financially disastrous 2011 merger. The Palo Alto, California firm filed suit against Autonomy cofounder Mike Lynch and former CFO Sushovan Hussain at the High Court in the UK on Monday, over …

  1. Anonymous Coward
    Anonymous Coward

    I never...

    ...could figure out what Autonomy did that would make money. "Data Mining" and other buzz words. I must have been like 12 at the time, but even I could tell that company was BS. HP have no-one to blame but their own greed and total lack of technical ability.

    1. Mr C
      Flame

      Re: I never...

      > but even I could tell that company was BS

      No. just NO.

      As an engineer and hands-on guy that implemented over a dozen big projects over a dozen or so years with Autonomy software at its heart i can tell you this was certainly not a BS company, nor did they have BS software.

      Long before HP walked in and smeared Autonomy's name by the simple act of overhyping it then subsequently writing it off, it was a decent company and their software was nothing short of revolutionary, provided it was implemented correctly and the job they were using it for made sense (which was not always the case).

      Over the years the software was good, the support was good, the people working at Autonomy were good.

      That very fact made HP overestimate howmuch they could squeeze them for.

      The one thing i can say though is that their marketing always was too full of buzzwords, i can see why someone who reads their whitepapers and website would think as you do.

      Lastly, i should note than I am not (nor ever was) an Autonomy employee so i have no reason for jumping to the defense of this statement, i just thought it should be corrected by someone who actually has had hands-on dealings with them long before they became associated with bad money

      1. hopkinse

        Re: I never...

        One of my previous employers bet and lost their shirt on Autonomy - they spent a fortune building a datacentre in Farnborough and buying IBM kit to host the Autonomy software, with a view to selling it as SaaS, so that customers didn't have to pay a seven figure sum to buy it outright. This was in the run up to the dot com bust and may have been a bit ahead of the curve but, needless to say, the whole project was driven by sales people who could only understand the sell and forget model of doing business. Mike Lynch was the hero of the day until it tanked when they couldn't get enough customers to sign up.. In the end the company was sold for a song to a big Dutch IT company.

    2. Anonymous Coward
      Anonymous Coward

      Re: I never...

      They manage to extract information out of unstructured data, the main guys are geniuses but as with any acquisition you make these people rich, pissed off with changes to their working practices so they jump ship.

      The sort of work Autonomy did is in big demand, trying to get information out of all matter of things, pictures, sounds and audio.

  2. Chairo

    HP top management bought a company that everyone said was overpriced an overhyped, and now they are shocked that it was indeed overpriced and overhyped.

    Sure, that must have been someone else's fault, right?

    Didn't they check Autonomy's accounting before the deal? Oh, wait, it was only a 11bn deal - hardly worth any attention.

    Stranger than fiction...

    1. Anonymous Coward
      Anonymous Coward

      To be honest, I'm more curious on how you 'fake' 8 billion in worth without A. Someone noticing. or B. Pocketing a shit load of cash you should of spent on the company. That's a lot of cash to fake the funk on...a LOT!

      1. itzman
        Holmes

        how you 'fake' 8 billion in worth

        you essentially trade with yourself at zero profit thus producing a huge cashflow.

        All that is then required is to make the transactions look external (I've known two people do this with two separate companies in a ring a ring of roses type arrangement) and them all you need is a believable proposition that this cash flow can be tapped to make a profit.

        That's one way to do it.

    2. Anonymous Coward
      Anonymous Coward

      @Chairo - completely agree. I reckon HP's incessant blustering is to distract us and shareholders from something, but I can't tell whether that something is sheer incompetence or rather more interesting.

  3. Otto is a bear.

    Never liked the company but...

    I have to agree the Autonomy product was very good, had some draw backs, like the amount of customisation needed, but it was used by some blue chip clients very effectively, I believe the BBC used it for driving their associated news stories features, and finding those embarrassing quotes that people make, and then try to pretend they never happened.

    I suspect it's all six of one half a dozen of the other, HP wanted the company and didn't look closely enough at their market and business, which was really quite specialist, and Autonomy probably didn't disclose what they weren't asked. This kind of thing is rife, the duty of the management of Autonomy and any company in the same position, was to extract the best price for their shareholders.

  4. Anonymous Coward
    Anonymous Coward

    Typical US approach to business, they treat it like a war.

  5. TonyJ

    Due diligence, anyone?

    Surely, given the sums of money involved, due diligence was performed?

    I may be naive but it cannot be easy to hide billions in wealth?

  6. thomas k.

    Shouldn't they be suing Leo, too?

    "During his tenure as chief executive at HP, the company lost more than $30 billion in market capitalization after a series of strategic missteps by the company, leading to his resignation."

    "HP eventually ... wrote-down almost $9 billion related to the Autonomy acquisition, which it indicated was due to a lack of due diligence during the acquisition process under Apotheker."

  7. Man Mountain

    From what I have heard about the way Autonomy recognized revenue, and forecasted, there were certainly some 'unusual' practices. And when I say heard, I mean been told first hand by current employees. I'm not sure what is legal and what isn't, or what HP should or shouldn't have been able to uncover prior to the acquisition but their practices were different to anything I'd seen before in a career of nearly a couple of decades.

  8. Anonymous Coward
    Anonymous Coward

    Fact is stranger than fiction...

    ...seems that the HP employed auditors only engaged with the Autonomy employed accountants for 1 days worth of due diligence. As both were part of the Big 4 accounts, it's good to see one screwed the other for not asking questions.

    If I was HP, I would be going after my accountants for not doing their work... or maybe they did and HP ignored it. Time to fire up the old Law 5 server and get ready for some processing... ;)

    At the very least it will give us a good bit of entertainment rather than the usual Sammy vs Apple bull*.

    I'm betting on Mike Lynch et al as if there really had of been something HP would have been all over this in court years ago, seems like they've spent their time trying to build up a story they can run with and add the facts to it.

    Now, where's the popcorn icon hiding...

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