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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.
This is a love letter...
Please don't run any other companies into the groud. Please stop whatever you're doing and go home, and avoid public life as a CEO, or politician. You've both proven you don't know jack.
The world would be better off without either of you.
Thanks;
The rest of the planet.
If telephones are outlawed, then only outlaws will have telephones.
I find it hard to believe that the management of HP failed to uncover fraud of this magnitude during their evaluation in the purchase of Autonomy. What this really means is management failed to do their due diligence in evaluating Autonomy and now need to to distract from poor financial performance due to a lack of competence at the executive level.
Runesabre
Enspira Online
I remember waybackwhen I last used Autonomy's categorisation and search engine. It wasn't very reliable and I never thought it did a very good job - neither the categorisation nor the searching. It always felt like a triumph of sales over engineering. I was amazed at the sale price to HP when it happened. Maybe this is something different, but somehow it rings true.
So, an 8.8 billion write-down on an 11.2 billion purchase and they are only alleging that "serious improprieties", rather than something like "epic, the-whole-boardroom-is-going-to-federal-country-club-for-maybe-five-years-or-so, fraud"?
Either corporate PR drivel is unusually polite, or white collar crime is absurdly superior on a risk/reward basis compared to little people crime...
Hiring the male equivalent -- an abusive, spoiled, narcissistic dick -- to lead your company is also a horrible idea, but companies do it all the time. And fail. It's not about gender, it's about being an asshat.
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
Kind of depressing hearing about HP.
Step 1. Buy a really expensive company.
Step 2. Ignore it for a year or so.
Step 3. Rationalizing how to dramatically throw it away.
Step 4. Profit? Whats a few billion $ between friends?
Here's a longgg list of HP acquisitions.
Some of the more notable ones that caught my eye:
Verifone 1997 $1.1 (billions)
Compaq 2002 24.0
P&G IT: 2003 3.0
Peregrin 2005 0.4
MercuryInter. 2006 4.5
Knightsbridge 2006 ?
Opsware 2007 1.6
EDS 2008 13.9
3Com 2010 2.7
Palm, Inc 2010 1.2
3PAR 2010 2.3
ArcSight 2010 1.5
Autonomy 2011 11.0
So have any of these actually been profitable for HP ?
I knew that Palm tanked (bye bye, WebOS).
I haven't heard good things about Knightsbridge.
Compaq seems like it was a break-even deal.
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.
Ok, she is not directly responsible for this fiasco although she does admit to voting for the sale. Just seems odd that one bad move after another seems to follow her wherever she goes. Honestly, I think that her and Carly are locked in a fierce battle for worst CEO of all time. Oops...look out...Balmer is closing fast...
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/
It never ceases to amaze me how often this happens. I have seen it first hand during an acquisition I was aware of, and here it is at HP. In the case I was aware of, my co-workers and others were doing everything we could to illuminate the problems before the acquisition went through, but the concerns fell upon deaf ears. It took years to clean up that mess. Of course the senior management who were responsible for the acquisition came through it unscathed, while the rest of us worked our asses off to "make it work". It looks like the same thing happened at HP.
As an executive, these people are paid to take care of these things. They are supposed to be able to handle M&A work. That is what all of those fancy degrees and business school is for. In the tech world, if you say that you can build an environment and then fail, it is obvious and you get fired. Yet some how in the C-suite world, if you say you can build a company and fail... nothing happens. I am totally in the wrong profession.
The statement that caused me most concern was, "'We stand by the forensic review that we've seen." Excuse me? Somebody didn't look closely enough. Wouldn't a deal this big require a bond? Were I an HP shareholder, that statement would start my petitions to the BOD that Meg should go. Were I an HP shareholder, I would expect at least a statement like: "We have commissioned an independent review to insure that our forensic accountants used due diligence. HP will actively support the authorities with appropriate jurisdiction in the prosecution any fraud." Hindsight is always 20:20, but the shareholders deserve a specific analysis of what went wrong and assurance that the company will support prosecution of fraud.
They are done. They are Alcatel and Xerox. They are profoundly broken and no amount of strategizing the paradigm and clousourcing the B2B experience is going to fix that. HP is now just a brand with nothing behind it and dysfunctional organization that doesn't know what the fuck its doing behind it.
They finally reached the critical mass of disorganized bullshit and mismanaged acquisitions run by a senior staff of psychopathic feudal warlords who do nothing except protect their own shit while the CEO, is busy molesting secretaries or running for public office.