'Happy to throw Leo under the bus', Meg Whitman told HP after Autonomy buyout Meg Whitman told London's High Court today she regretted saying she was "happy to throw Leo [Apotheker] under the bus in a tit-for-tat" during the fallout over HP's purchase of Autonomy. Robert Miles QC, barrister for ex-Autonomy boss Mike Lynch, showed Whitman - HP's former CEO who replaced Apotheker - a copy of a December …
"Well I read this as how important it is to be clever and witty at the top and higher management"
Meg was attempting to rattle Miles - they disagree over a point, she attempts to take control of the schedule and then corrects him on a technical point to prove "she is right".
Interesting, she is clearly very clever, but this case isn't about who the cleverest is - it's about who is responsible for a huge purchasing screw up. Throwing in the comparison with Hurd just to make it clear that Leo wasn't up to the job based on share price. Distancing the board (who stuck around) from Leo's bad decision and wanting to make the guilty pay while wading through a deep pile of shit and coming out spotless...
The points around synergies are interesting - does 7+4 = 11 (100% of Autonomy plus 50% growth) or 7 + 7 + 4 = 18 (100%+100%+50%). I can see the former in the Autonomy deal, but Leo mentioned an Autonomy valuation of ~US$18B too. Did HP really think they were getting a bargain? It would explain a great deal about how they acquired Autonomy.
And the Autonomy services platform that would be launched would be a "joint go-to-market" - i.e. HP's board taking the credit for another companies (Autonomy's in this case) work.
And the mention of Oracle.
Ignoring the fraud (I don't doubt the evidence, but I want to see if it is more than one or two incidents), Meg's testimony makes me think HP really thought Autonomy were worth more than they were paying..
"And the mention of Oracle."
AFAICS the purchase price was based on an auction between Oracle & HP. Leo wanted it it badly enough to pay $8b.
It sounds rather like selling art on Southery's or Christies. In terms of value of canvas & paint the;picture might be worth a few quid. Pre-sale the estimate might be £1m. If two rich bidders go head-to-head it might go for £2m and in general that's taken as the market price - at least until the next one goes for £1m as expected. Was Leo within his rights to go into a bidding war with Oracle and if not why didn't the board stop him?
Did they really think that they were in a bidding war with Oracle? Or was that the post-facto tale spun for this trial.
There aren't many nice things to say about Larry, but he did have a grasp of the industry. He didn't need to look at the books to know what the company was worth. HP did get to look at the books and the board still got it grossly wrong.
(I'm sure there were lots of people at HP that knew as well, but top management and the board were playing their political games and didn't care about the opinions of their own experts.)
The comparison of two auction bidders leaves out the key driver: why do the bidders want it ? Bidder A might want it to make complete a collection of works by that painter; bidder B might bid because that painting was owned by their family before the Nazi's looted their town, or it might be malice because they want to thwart bidder A, or, anything else but what motivates A. Then throw depth of respective pockets into the mix. And as pointed out, the next time it might not be worth the same becuase of what is at stake at the time.
And so, introducing Oracle to the discussion of whether Autonomy misrepresented their earnings is largely irrelevant. HP would have paid up to as much as their business case could take. We don't know what that is. With the benefit of 20/20 hindsight, it appears too much was paid.
There is some "law" (like Occam's Razor) that says one should not attribute an action to malice when poor judgement or ignorance will suffice. If Autonomy fudged their numbers, no reasonable amount of due diligence is going to uncover that; that's why representations are signed that do (or do not) warrant the accuracy of the information provided, and these direct the legal consequences that can follow. And so, here we are. Even if Leo and HP had a silly business case that caused them to pay too much, that's not necessarily a reason to forgive Lynch & Co misrepresenting their data to the market. And its worth noting that some accountants/consultants involved have settled with HP out of court rather than go to trial on this.
Reporting revenues before the cash hits the bank? Naughty, but half decent due diligence would have spotted that.
Selling hardware? Sure, if the customer wants a single point of contact/contract. Add in some more hardware not related to the project so the customers IT manager can slip it past their board? Sure, whatever Sir wants. Again, decent due diligence would have separated h/w from s/w revenues.
...the billionaire businesswoman, worth $3.8bn...
She may have that much, but I've not see any evidence she's worth it.
@Anonymous: ‘"Purdah!" Well I read this as how important it is to be clever and witty at the top and higher management, but how little that reflects on whether they are actually smart enough to run a company.’
The only salient question is - who at HP made the decision to buy Autonomy? Not so clever if Hewlett Packard had to markdown an $11.7 acquisition by $8.8 billion. Going on this exchange, I'm not impressed by either. And as having worked in close proximity to these type of executives, you wouldn't be either, it's all front with these kind of people.
"Or is this just an example of how toxic it is at the top, and dumb-arsed decisions are made and followed through based on saving face and massaging egos?
it would explain a lot, and not just at HP."
Classic example is the Labour party, the millionaire leaders (Emily Thornberry aka Lady Nugee & Jeremy pensioner Corbyn on receiving his state pension plus his generous leader of the opposition salary totalling £137k springs to mind), the racism, double standards, party in a party, sympathising with terrorists etc and then turning down attending a state banquet for a visit by an arch ally here to commemorate the 75th d-day anniversary (i see his point but if he can celebrate with terrorists he can attend a state banquet).
Classic example is the conservative and unionist party, the leaders of which ("National Anthem"* Cameron, Maybot, Boris The Fibber) can't get their heads out of their upper middle class privilege to realise that 99% of people have been well and truly shafted in the past three decades.
... there, fixed that for you
[ok, this is not Black Mirror, I know the honorable member's member was only resting in the pigs mouth]
When I first heard about her playing country music in the boardroom I thought perhaps she was related to the famous slayer of Marauding Martians. She's not but if Indian Love Call was played to me anywhere, not just a boardroom, I would be looking for a severance package.
"Your comment," said Miles to Whitman, "was 'happy to throw Leo under the bus in a tit-for-tat'."
Am I to understand that, since Whitman said something not very nice, Lynch is supposed to go free ? I cannot get how a court case cannot stay centered on facts relevant to the case, the case being Lynch falsifying Autonomy's figures.
That Whitman would be happy to throw Apotheker under a bus is perfectly normal. She shouldn't apologize about that, it is a normal human reaction.
And quite understandable as well. I'm not part of the board and I would happily throw that guy under a bus.
"That Whitman would be happy to throw Apotheker under a bus is perfectly normal. She shouldn't apologize about that, it is a normal human reaction."
I read this to mean two things:
- Autonomy was being completely blamed on Leo, regardless of the rest of the boards positions at the time, including Megs
- all of the financial issues HP may have been experiencing would be piled onto the write down, but only Autonomy's contribution acknowledged. This isn't unusual behaviour following an acquisition, however it becomes a significant issue for Lynch if he is blamed for an US$8.8bn write down in the value of HP when Autonomy contributed a little over half of that. Even the US$5bn figure in this case appears to represent more than the over valuation of Autonomy.
i.e this goes towards establishing whether HP are being honest or using Autonomy as a scapegoat
"Hey, I didn't have the time to read all those documents about an 8bn acquisition I decided, and the board didn't save me from my bad decision and lack of due diligence!". What else does he need to be put in a bad light? Did he really hope to have enough friends in the the board to cover that and share the blame?
It seems that Apotheker is playing the role of the "drive the attention buffoon". He took the blame for huge losses, but it seems strange that the company takes in a complete outsider just before losing a lot of money just to get rid of him so quickly, and it also feels strange that all the reponsibility rest on someone who's been there for about a year. I can bet he happily played the role thanks to a huge pay package, but I don't believe he really had the time and the means to do all this damage by himself.
What about the "regrettable" words by Meg Whitman? That's the usual provocation designed to grab the headlines, obviously she later "regrets" it, but by doing so people read about it twice.
The song, regarded across the Atlantic as a classic of the uniquely American genre, is about a drunk, penniless gambler who dispenses unsolicited advice to a traveller on an overnight train [...]
...after which he dies, in an apt metaphor for the whole HP-Autonomy saga.
"You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done"
Seriously Leo and Meg is a friggin' song not a cue card on how to do multi-billion dollar deals. Count the money before you do the deal. [Shesh]
Meg Whitman and Mark Hurd combined fired hundreds of thousands of HP employees. So much pain for so many folks. Now HP is but a shell of what it once was, as it continues to circle the drain. Yet Whitman is a billionaire, and Hurd has a net worth in the hundreds of millions. There is just something so wrong with this picture. CEO's like Hurd and Whitman manipulate the corporations they run in order to maximize their own earnings. They couldn't care less about the workers they use and destroy as they enrich themselves.
There was a time in history when HP was famous as a technical innovator who filed more than enough patents that they could use pretty much any technology they wanted and make deals with other companies to trade tech. They would engineer and build big and amazing things and if they panned out, they got rich, if they didn't, they'd sell them off.
Then the suits came in
HPe has become nothing more than an Acquisitions and Mergers company. They don't make any new technology. They "me too" a crap load of tech at times. But regarding innovation... check out HPe's labs/research website. Instead of actual innovation, it looks like a list of research of "why shouldn't we invest money in research" thing. I mean really... they wrote one whole paragraph on why they won't waste money on quantum computing and it's basically "We are going to prove P=NP and make a new way of saying it so if we can solve one NP problem, it will solve all NP problems."
There have been a bunch of CEOs that have converted HP from being a world leader in the creation of all things great in technology to being a shit company which spends $8 billion on a document store and search engine that "might be big one day".
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