HP crashed Autonomy because US tech titan's top brass 'lost their nerve', says lawyer for ex-CEO Mike Lynch Hewlett Packard crashed Mike Lynch’s thriving Brit software biz Autonomy into the ground after buying it, the former Autonomy CEO’s barrister told the High Court today. And if there was any accounting fraud on Autonomy's part, as alleged by HP, an awful lot of people would have had to turn a blind eye to it, the lawyer added …
"What happens when courts on either side of the Atlantic come to opposite conclusions on virtually identical cases?"
TTIP 2.0 happens, and the US takes back control?
Once Brexit happens and the Yanks over-promoted trade agreement turns out to be the undead remains of TTIP, the UK will presumably have to abide by whatever the US wants.
https://www.independent.co.uk/voices/comment/what-is-ttip-and-six-reasons-why-the-answer-should-scare-you-9779688.html
Btw, "independent group" may have been an interesting choice of name for this ambitious young Party Leader in waiting:
https://www.independent.co.uk/news/uk/politics/embarrassment-for-rising-star-of-labour-and-betting-shop-critic-chuka-umunna-after-he-accepts-20000-8748755.html
Why doesn't the Indy date its articles? Your TTIP reference is old: that prospective deal died long ago - back in the Obama era - precisely because the EU wouldn't accept US red lines: food safety standards and possibly others. I'm sure I saw that article years ago.
Interestingly Michael Gove and (reportedly) the prime minister have firmly ruled out lowering food standards post-brexit. So no US trade deal. Lots of potential there for another huge Tory party split.
"Your TTIP reference is old"
Correct. Old, but not necessarily obsolete. Look more carefully, at things like Investor-State Dispute Settlement in the likely TTIP 2.0. How does it compare with TTIP Mark 1?
"Interestingly Michael Gove and (reportedly) the prime minister have firmly ruled out lowering food standards post-brexit."
Does anyone give a monkeys what those idiots in Westminster say in public? It's what they *do* (which is often determined by things which are kept out of sight of the voting public) that matters.
E.g.how many folks are aware that the UK and the US have recently agreed a deal to preserve the City's role in "the world’s multitrillion-pound derivatives market, with the US and the UK controlling 80% of the $594tn (£454tn) a year business – worth more than five times world GDP.
About a third of the £230tn of derivatives contracts traded in the UK every year come from US companies, more than any other jurisdiction.
The development comes as Brussels prepares rules that would force clearing houses – financial institutions key to the trading of derivatives – outside the EU to come under the supervision of its regulators."
Good to see Farage, Rees-Mogg, all the usual suspects, looking after the interests of the great British voting public. Or not, as always.
>"Your TTIP reference is old"
Correct. Old, but not necessarily obsolete.
I suggest you also look carefully at what is in the US's initial "proposed trade deal" with a post-Brexit UK, and compare it to TTIP. Additionally, it includes many elements that can be considered to involve the transfer of sovereignty and thus control to the US...
They buy something, they think they can force it to run the HP way, they destroy whatever made that acquisition an initial success, drive out all the good staff and then eventually write it off as a lost cause and spin it off.
Lynch isn't wrong there.
I generally recommend to my customers that if they purchase HPe designed and developed products, go for it. But as soon as a company is acquired by either HPe or Cisco, they should see it as a sign they should consider looking for alternatives.
HPe and Cisco sales people don’t like selling products that take work. Meaning that if they can’t count on making regular bonuses, they lose interest. This is why most HPe and Cisco customers don’t buy what they actually need and end up never getting anything working as it should.
Even when these companies buy great products, if the sales people can’t figure out how to make them fit their portfolio, they simply won’t.
Cisco and HPe also lose interest quickly. Many times, both companies have purchased companies producing products targeting new markets. They try to sell their products to their existing customers and their customers who are conservative and are also often backlogged don’t catch on until the development teams of those products have been downsized and placed in a purgatory in India.
So the moral of the story is... don’t expect a company that is as big as a government, turns over leadership as governments do, and sells mostly to governments to behave any differently than any other dysfunctional government.
To do what, convince people that Meg wasn't responsible ?
There is a multi-billion dollar deal on the table and I'm supposed to believe they handed it to the intern ?
For frak's sake I am sick and tired of CEO's finding any pathetic excuse to weasel out of being responsible for what happens while they are at the helm. She gets the pay, so she takes the blame.
Anything else is pure, unadulterated hypocrisy.
Meg wasn't the CEO at the time of the Autonomy purchase. So no, the mutli-billion dollar deal wasn't done by an intern, it was done by the CEO prior to Meg, Leo Apotheker. Meg did oversee the writedown however.
Reading the wiki page on it, this is funny in a sad/unbelievable type of way:
Though Apotheker served barely ten months [as CEO before being fired by the board], he received over $13 million in compensation. HP lost more than $30 billion in market capitalization during his tenure.
Well, that was a well spent $13 million on a CEO!
Though Apotheker served barely ten months [as CEO before being fired by the board], he received over $13 million in compensation. HP lost more than $30 billion in market capitalization during his tenure.
Well, that was a well spent $13 million on a CEO!
HP truly are a bunch of mugs...I would have done that for them for just $10 million
It's quite hard to lose a great deal of money, and Apotheker had a rare talent. Look at what Musk does, and the share price stays fairly buoyant.
If you announced you intended to spend the entire annual profit on hookers and blow, Wall Street traders would probably think that was a smart move and the share price would go up.
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I'm not sure KPMG have a part to play:
"Back in August 2011 when HP was about to buy Autonomy for $11bn, the US megacorp “valued it at that stage on a standalone basis at some $9.5bn but together with synergies at $17bn."
Autonomy had published an annual report in 2010 and the 2011 numbers were rumoured to be in line with those based on announced growth. KPMG are likely to have reviewed the numbers, agreed they broadly matched what was reported and reported any concerns to the board.
The question is where did HP come up with it's valuation and synergies - HP clearly thought they were getting a bargain at ~$11bn. That may explain many of their pre-purchase actions.
THIS.
The fact that HP have never gone after KMPG strongly suggests it was a mess of HP's own making. I suspect the due diligence report said something along the lines of "broadly in line with market cap". Then HP wilfully inflated the valuation of their own accord, probably at the urging of Leo.
Meg then inherited a slow motion car crash that she either didn't jump on quick enough or fatally made the wrong decision on.
KPMG are likely to have reviewed the numbers, agreed they broadly matched what was reported and reported any concerns to the board.
As someone whose company has been audited by KPMG (meaning I see this from an employee perspective), they seem to have all their ducks in a row with each time an audit is conducted. I would "think" that they would be like that in all situations. Because of my experience, I am not sure I like the term "broadly matched" as KPMG seems to be fairy thorough. If they were truly involved, I am not sure that HPe has a valid case against Lynch.
Autonomy was always a "fad" company that didn't do anything of value. But it had the "data mining" buzzword.
It's a bit like all the VC cash thrown at random AI and Blockchain companies today. No-one really expects any of them to actually succeed.
No sympathy for HP. I'm betting the decision makers didn't even install Autonomy's software before buying the company...
Small correction - the people bunging money at them now are very keen NOT be the ones in debt when the merry-go-round stops.
2 ways to win at the startup VC game. Ride the unicorn to the finish or glue a spike onto a horse, flog it and run.
I'm betting the decision makers didn't even install Autonomy's software before buying the company.
Decision makers do not install software. It is likely that few ever have. They tend to be MBAs, liberal arts grads or (perhaps especially UK ones) read classics at a university that was pretentious when Queen Victoria was around. They may be able to read a balance sheet but it would be interesting to know how many can use a spreadsheet.
Decision makers make their decisions using accountant input, gut feelings and perhaps word of mouth among their chums.
One of the big problems in Big Data is that rather than going with what the data are telling them: "Decision makers make their decisions using accountant input, gut feelings and perhaps word of mouth among their chums." Business, government, whatever. And when the results don't match their expectations, the (what they are calling them now) data scientists get the blame.
HP are 100% correct - they were selling snake oil. I met a number of times with Autonomy at their Head Office and rented London Sales Office next to the Ritz. It was like meeting a cult, the 20 something's in their dark suits looking like wanabee IBMer's, the chanting of 'Mike developed this clever algorithm thingy' and the sheer pomposity of starting every meeting with the announcement of their share price. Their standout tech example was a speech to text demo of a live TV news feed. Well it was 2006.......
The court case is wrong - it should be the HP shareholders bringing a class action against the board members involved in signing the deal. Due diligence?
The guys on the IDOL side of Autonomy were always easy to play with though, you just had to say "So, IDOL...it's just a search engine then?" and they would go nuts with the official "Our search engine isn't a search engine" mantra. Remember doing an IDOL training course years ago alongside some BBC guys and we basically took it in turns to keep asking the question, watching the trainer slowly go mad :)
I was intrigued by the prospects of Autonomy when I lived & worked in Cambridge. Businesses generate petabytes of data, and sometimes asking how they organise that data just gets a finger pointed at a pile of server racks. Or in the general direction of a passing cloud. So it's always been a challenge to find useful data when you need it, and the promise of something that can manage unstructured data was appealing.
So I think it's a bit unfair to say it was 'just' a search engine, because so is grep. Or Google's search appliances. But I also wondered a) did it work? and b) how much of a ball-ache it would be to restructure existing company systems, data and procedures so it could then be searched.
The USP was supposedly that the software was more than just a search engine and would analyze/mine and give context to data and could do supposedly 'intelligent' search.
The company I worked for in the late 90s/early 2000s sunk a shitload of cash into a datacentre built in their head office in Farnborough ( go figure??? First mistake - it was prime office estate not nice and cheap industrial unit) to sell Autonomy as an early SaaS offering.
Like everything else that we were doing at the time that didn't involve box shifting or other throw it over the wall and forget business, our sales people didn't have a clue and it went nowhere. Pretty much broke the company and the net result was that we were bought out by a Dutch outfit called PinkRoccade.
All the s**t HP are talking about was being done by MS decades ago.
So in 2016 all major auditors of all major accounting firms should know what tricks to look for.
If I were an HP stockholder I'd be fuming that HP spent $11Bn of cash (not HP shares) and then literally burned $8Bn from the companies asset base.
So class action lawsuits to HP's Board for being f**kwits and KPMG for apparently being totally incapable of spotting how suspicious the pattern of deals was (in Accounts it's the transaction pattern that says "S**t something's not right here. Somebodies trying to pull a fast one").
Shifting where things are recognized in the company's books dates back, at the very least, to The Gilded Age (ca. 1890's) by my recollection from my American Economic History course at university. It's the most well known trick there is and yet, curiously, accounting firms can't identify where it is a problem from their audits for the last 120+ years! Riiiiight.
HP and The Meg didn’t believe in Leo’s vision of transforming HP into a Software focused business. Leo was a Software guy and his vision was that a hardware business, especially what HP manufactured, was a VERY low margin business and could not grow at scale. Core HP folks, some Board members and die hards thought it blasphemy to make such a huge pivot from HPs historical roots. So, they forced Leo out and came up with this BS scheme. Does ANYONE with half a brain think that a huge company like HP and their auditors missed something like this??? It’s absurd to think that .... if you do, I have a bridge to sell you... BTW, I was there for all this.... I can confirm all the internal chatter and the directives on why to say to our customers and how to spin it..... it caused a huge pause on the part of my clients as they didn’t know what all this meant to them... it was HORRENDOUS... and The Meg was HORRIBLE thru it all... she came to NY several times and it wasn’t uncommon to hear her yelling at people including the dressing down of several of my peers... WORST EXECUTIVE EVER!!!
I have no axe to grind in favour of Lynch et al: when I was at a competitor to Autonomy we observed that their products were designed to guarantee a regular flow of professional services revenue. ie, flaky, badly documented and needing constant tweaking.
But HP should have done due diligence on more than just the financials. Anyone in the sector would have advised a very long barge pole.
HP and Autonomy are as bad as each other. Lynch is just another obnoxious wannabe Steve Jobs style bully and HP/HPE has been "led" by people who know nothing about technology for decades.
What I don't get is why people don't read up on Enron and similar accounting scandals and see that Lynch et al just copied their ideas such as being obsessed with the stock market valuation, banning any analyst that dares to disagree with how clever they are and booking 10 years worth of revenue and "profits" as soon as a deal is signed even though the money ain't ever going to be handed over. Lynch then added his own asininity by vastly over-rewarding salespeople who exceeded their targets and sacking the worst performing 5% every quarter.thus encouraging them to lie and cheat even more than usual (I know - software salespeople that lie, who'd have thought?).
you’re going to hear a lot of evidence about different resellers, whether there were signed agreements on the book... and so on. You’ll probably be struck during the trial by the granularity of much of the material relied on. But Dr Lynch wasn’t involved in any of those discussions.”.
Please clearly explain and expand upon the full meaning of "the granularity of much of the material relied on."
Is that a euphemism for half truths which always have an increasingly rapid and rabid decay built in to discourage or pitilessly punish such Asinine ACTivity?
No.
What it means is that well remunerated QCs will focus on tiny bits of detail at length in the hope that the great big things will get overlooked in the text walls. It's like Parliamentary corruption; ignore the really big stuff like newspaper owners being able to tell governments what to do, focus on duck houses that fill up lots of space in those newspapers.
What it means is that well remunerated QCs will focus on tiny bits of detail at length in the hope that the great big things will get overlooked in the text walls. It's like Parliamentary corruption; ignore the really big stuff like newspaper owners being able to tell governments what to do, focus on duck houses that fill up lots of space in those newspapers. .... Voyna i Mor
Ah yes ...... that's what I was thinking too ....... a corrupted judiciary in the thrall of incestuous reward.
But that only works whenever it is a top secret and generally unknown, Voyna i Mor.
Why ever are they not thinking that their ploys are obvious? Are they compromised and being held to virtual ransom with some unpleasant skeletons in their cupboards?
Or are they missing vital in house intelligence to defeat the subversion?
And how can that be answered in anything other than a resounding YES nowadays.
HP did not do a proper audit and are now trying to blame everyone but themselves.
And yes, they did drag their feet and created a lot of uncertainty with Autonomy's existing and future customers.
I also have no doubt Autonomy is also sketchy in some way. It's a tech company, innit? But this is mostly HP's fault.
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