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Meg Whitman Says HP Was Defrauded By Autonomy; HP Stock Plunges
McGruber writes "CNBC is reporting that Meg Whitman claims HP was defrauded in its purchase of Autonomy. 'We believed there is a willful effort on the part of certain members of Autonomy management to mislead shareholders when Autonomy was a publicly traded company, and to mislead potential buyers including HP,' Whitman said. 'We stand by the forensic review that we've seen,' she added. I wish her the same level of success I had when I filed an eBay claim."
Also covered at SlashBI, which names the write-down damage: $8.8 billion.
I used to work for Autonomy. I have no sympathy for them.
My little article is here
After Autonomy's lawyers bullied me and anyone who supported me to take my article off line. I eventually lost my net access after Autonomy complained to BT, my ISP; they never issued an explanation or apology but still took money from my account. It took years and a letter to the BT chairman before I got a refund.
The article was originally subtitled "Stress Is More Fun" but seems to have got lost; if you read the article, you'll find out why it had this moniker. To find out what others think, look at Glassdoor
My web domain.
I'm just making a wild guess here, but maybe upper HP management decided that Autonomy was the only possible means of getting HP back on track. This probably filtered down the chain of command to the people doing the investigation. They may have just chosen to gloss over anything that seemed funny because they were convinced that management did not want to find any problems as if this acquisition didn't go through, HP was going to get beat up financially in the stock market and more layoffs were likely. Or we have to accept that Autonomy was just insanely good at hiding their malfeasance even though various stock traders had been shorting the stock for months because they felt their financials were fishy and somehow the traders figured out what the investigators couldn't. I find that unlikely.
I see this as kind of a variation on the way that decisions sometimes got made in the old USSR. During the days of the Soviet Union, bureaucrats got into the habit of anticipating the needs/wishes of their superiors. I'm guessing that there's probably a culture of fear in HP where the masses are afraid of layoffs and those at the top probably shoot the messengers when they get bad news, so this was a natural outcome.
I find it hard to believe that the management of HP failed to uncover fraud of this magnitude ...
I have sat on a few boards (none nearly as big as HP) and I am not surprised in the least. The CEO wants to "make a deal" to "execute a strategic vision". So he sells it to the board, which is too busy with pissing contests and bike shed arguments to spend much time on it. Then the deal is publicly announced. Only then is the "due diligence" done. If any problem is found, there is enormous pressure to "make the deal happen" to avoid losing face by unwinding the deal. 80% of all mergers end badly for both customers and shareholders, yet every CEO thinks his deal is one of the other 20%. HP was in a bad situation, with their commodity businesses in PCs and printers generating little profit and even less growth. So their "strategic vision" was to move into software and services. The Autonomy merger was part of that, and if it fell apart other potential partners would shy away, and the strategy shift would likely fail. So it is likely that the accountants pointed out lots of problems, but were overruled by people with too much at stake to let the deal fall through.
Hate HP for making us individual taxpayers pick up the slack
So you are arguing that taxes should be paid on total gross revenue, regardless of costs? That's gonna make your grocery bill go up by about 30% (grocery stores typically run on 2% to 5% margins, so taxing on gross revenues instead of profits means they will pay taxes of 35% of the total bill rather than on the 2% profit.)
I'll just add that according to many economists, as a class corporations essentially don't pay taxes - they only pass those taxes on to customers (whether corporate or individual) as increased prices.
And if you think the money just goes to management, that's rarely true (though widely publicized). When competition is working as it should, corporations that keep the money that would have gone to taxes will be forced to reduce their prices to match their competitors. And if board management is working (which it often isn't), even if they can keep the prices and profits up, the money will be passed to the investors as dividends and/or stock price increases. Since the vast, vast majority of stock is held by institutions such as 401-K funds, pension funds and the like, most of the money still ends up eventually in the hands of individuals like you and me.
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
There's a very persuasive argument to be made that the Compaq acquisition is what really finished HP as an engineering company. Apparently there was some ferocious in-fighting after it. Sadly, the Compaq guys won for the most part and took the company to an almost entirely sales and marketing based strategy.
Those of us who cut our teeth on HP test equipment, early HP/UX workstations and servers, HP LaserJet printers, and HP calculators still mourn the death of Bill and Dave's dream. :-(
Oh, it's all HP's fault. Check this out.
1) Autonomy tried to sell to Oracle for $6billion, which Oracle rejected as overpriced.
2) Autonomy CEO denied ever trying to sell to Oracle, said Oracle didn't know anything about Autonomy's financials.
3) Oracle called the Autonomy CEO a LIAR, publicly, and shared his presentation with the whole world to prove it.
They put all the info on a page called, "Please Buy Autonomy." You can read it now yourself and decide if you would have bought autonomy in 2011. I've always thought Oracle would be a miserable place to work, but now I see some people are definitely having fun, just not programmers.
"First they came for the slanderers and i said nothing."
Two words: Skype purchase.
Two more words: Paypal purchase.
Probably the best business move that Ebay ever made - sucks for customers but the vertical monopoly it created is great for Ebay. Also occured while Whitman was CEO there.
I'm not a Whitman sycophant, I just think that if you are going to cherry-pick you should at least pick a good cherry when you pick a bad one.
When information is power, privacy is freedom.