HP ain't happy about its 2011 Autonomy buy. Hewlett-Packard (NYSE:HPQ) accuses Autonomy's ex-management of selling it a pup, alleging dodgy accounting and other naughtiness. But there are two sides to every story—sometimes three.
In IT Blogwatch, bloggers seek out all viewpoints.
Your humble blogwatcher curated these bloggy bits for your entertainment.
Chris Kanaracus can reveal this:
HP acquired Autonomy in 2011 for $10.3 billion under...then-CEO Leo Apotheker, who was ousted after a short and tumultuous run. ... HP said an internal investigation has found Autonomy..."misstat[ed its] financial performance." ... An unnamed "senior member of Autonomy's leadership team" came forward...and alleged "that there had been a series of questionable accounting and business practices...about which HP previously had no knowledge...a willful effort to mislead."
HP has referred the matter to the U.S. Securities and Exchange Commission [and] the U.K.'s Serious Fraud Office. ... "HP is preparing to seek redress against various parties in the appropriate civil courts"...according to the statement. MORE
Jeremy C. Owens begs a minute of your precious time:
The final nail in HP's coffin, or a new beginning? ... The only hope for those who still believe in the company is that it is the last of the skeletons in HP's closet...a rock-bottom starting point to begin rebuilding the company that helped make Silicon Valley.
[HP] believes Autonomy used a series of accounting maneuvers to overstate its financial performance. ... HP's earnings results were indeed gallingly bad, with revenue decreasing year-over-year in its core businesses.
HP's 2011 acquisition of Autonomy...was meant to be a move in a new direction. ... Autonomy was a specious choice for such a move from the beginning, though...even HP Chief Financial Officer Catherine Lesjak told the HP board...[it was] "not in the best interests of the company." ... Investors jumped out of HP's sinking ship Tuesday on Wall Street, sending the stock as low as $11.35, its lowest price since 1994. MORE
So what were these alleged beancounter tricks? Arik Hesseldahl explains HP's allegations:
...that people at Autonomy took certain accounting actions [that made it] seem more valuable than it was. ... [That it] sold some hardware products that had a very low margin or [at] a loss...and booked those hardware sales as high-margin software sales. At least some portion of the cost...was booked as a marketing expense. ...that Autonomy was selling software to value-added resellers...in which there are ultimately no end users. ... [That] revenues for software subscriptions — that should have been...recorded as coming in the future...were stripped out and booked all at once.
HP will likely sue someone. Whitman conceded that it will likely take years. MORE
But Michael J. de la Merced seeks the other side of the story:
The former chief executive of Autonomy...Mike Lynch, insisted that the first he had heard of the allegations when HP announced [them]. ... “We were shocked and very surprised. ... It’s completely and utterly wrong.” ... Mr. Lynch has not been accused of wrongdoing. But he said the company truthfully reported its sales...that it did not mischaracterize.
He added that he was unaware of any instance of resellers inventing customer transactions. ... He posited that some discrepancies may have arisen because of differences between generally accepted accounting principles, which are used in the United States, and international financial reporting standards. ... Moreover, Mr. Lynch said that HP had thoroughly combed through his company’s books...“They did due diligence that involved 300 people.” MORE
Meanwhile, Brooke Crothers seeks the light at the end of this tunnel:
"...we are very focused on product, product, product," said CEO Meg Whitman. ... "Great companies return to greatness on the basis of product.". MORE
At which Omar Gallaga quips:
Whitman vows a company comeback with strong products. ... "So, uh... anyone got any stong product ideas?" MORE