I thought this sounded familiar - AlexMuir called it:
<a href="http://news.ycombinator.com/item?id=2902749" rel="nofollow">http://news.ycombinator.com/item?id=2902749</a><p>and score one for Larry Ellison:
<a href="http://news.ycombinator.com/item?id=3051730" rel="nofollow">http://news.ycombinator.com/item?id=3051730</a>
[disclaimer: worked for Autonomy. This view represents my personal sole oppinion and not of the (former) employer]<p>I can't tell too much, but everyone I knew was in shock when they announced the price (12$bn), this was, way, way over what I internally valued the company ( I was counting about 2$bn max - stock was better but is a result of offer/demand).<p>Either Mike was/is a good seller, or HP ( or Leo Apoteker ) was corrupt or dumb.
Mike Lynch (ex-Autonomy CEO) is speaking today at a start-up conference in London. Who wants to bet he won't be taking questions?<p>What the HP press release doesn't mention, but what the BBC and others are reporting[2] is that HP are both planning to refer it to the SEC/SFO and take civil action against "various parties". It's not a huge leap of faith to suggest Mike Lynch is probably one of the parties involved.<p>[1]: <a href="http://www.wired.co.uk/news/archive/2012-10/25/mike-lynch" rel="nofollow">http://www.wired.co.uk/news/archive/2012-10/25/mike-lynch</a>
[2]: <a href="http://www.bbc.co.uk/news/business-20412186" rel="nofollow">http://www.bbc.co.uk/news/business-20412186</a>
Back in May, ex-Autonomy CEO Mike Lynch was ousted by HP (or left out of frustration, depending on the source)
<a href="http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/9287201/Mike-Lynch-ousted-from-HP-after-Autonomy-disappoints.html" rel="nofollow">http://www.telegraph.co.uk/finance/newsbysector/mediatechnol...</a><p>I have to say, I can't recall hearing about Autonomy...not that I keep up with all the tech news, but a $10B valuation is pretty big. Is it just accounting fraud that's going on, or was the technology not what it was claimed to be? $10B for tech that would encroach on what Google/Apple/the NSA would do seems like it would make Autonomy more of a household-tech name, even if it was based in the enterprise sector:<p><a href="http://en.wikipedia.org/wiki/Autonomy_Corporation" rel="nofollow">http://en.wikipedia.org/wiki/Autonomy_Corporation</a>
> <i>Autonomy's technology attempts to "understand" any form of unstructured information, including text, voice, and video, and based on that understanding perform automatic operations, for example inferring what the user wants and on that basis finding other information that may be of interest.</i>
For me, this highlights why tech investing is so frustrating.<p>I saw this coming and would have shorted Autonomy if I had the money. But guess what? I'd have lost a fortune even though I was (allegedly) right.<p>DHH has been shorting Salesforce for a good while. He's losing that bet as well.<p>Equity investing often bears no relation whatsoever to reality. The "bigger fool" element is huge.<p>That said, I think this may be the end of HP. A bold claim, but they are going to have to fight some serious allegations of corruption, incompetence and negligence.
Cross-posted from the other Autonomy thread:<p>I have no comment on Autonomy's finances. We did however evaluate it's product vs Google's search appliance.
The Google Appliance we pretty much plugged in and let it do it's thing. After a few days it was giving excellent results on our massive (80,000 people) company intranet.<p>The Autonomy server had to be constantly tweaked and fiddled with to even get it near to the relevance of the results.<p>Unfortunately, Autonomy had flogged a loads of licenses to another part of the business for peanuts, so we had to go with their inferior product.
The paragraphs in question:<p>"Fourth quarter and full year fiscal 2012 results include a non-cash goodwill and intangible asset impairment charge of $8.8 billion relating to the Autonomy business within the Software segment"<p>"The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge."
This is an "intangibles and goodwill" writeoff - its not nothing but it is also a "guesstimate" of value.<p>Essentially they "guessed" a year ago Autonomy was worth 10bn, now they are guessing its worth its yearly sales cash income - ie no goodwill at all.<p>Given that at the time of purchase it had 1bn in sales, and now they have lopped that (plus deprecation) to the same suggests the problem is to do with allocation of revenue than the actual viability of the software
Deloitte (large accounting firm) signed off on the independant auditor's report... summary here: <a href="http://www.zerohedge.com/news/2012-11-20/deloittes-2011-autonomy-independent-auditor-all-clear-sign" rel="nofollow">http://www.zerohedge.com/news/2012-11-20/deloittes-2011-auto...</a><p>Is it just me, or does this kind of stuff scream "the system itself, allows massive fraud to occur" ?
This looks like a huge capital loss for HP. But, is it actually a move to lower HP's tax burden ahead of the expiring Bush tax cuts?<p>It seems to me that they valued it one-way a year ago, based mainly on intangible value. But now, they are valuing it another way, based on actual sales, that gives it a lower value that looks like a capital loss for HP.<p>In real terms though, what capital has been lost? They still have all the Autonomy resources they paid for a year ago.
The other big acquisition in the enterprise search space around that time (Fast, bought by Microsoft for $1.2 billion) had similar problems, kind of odd. <a href="http://techcrunch.com/2008/07/03/did-the-enron-of-norway-pull-a-fast-one-on-microsoft-more-details-about-the-mess-at-fast-search-transfer/" rel="nofollow">http://techcrunch.com/2008/07/03/did-the-enron-of-norway-pul...</a>
For the ones who say due diligence is constrained by time and the company not showing visible signs of fraud, accusations have been flying around for a long time. See <a href="http://email-museum.com/2010/04/22/autonomy-creative-accounting/" rel="nofollow">http://email-museum.com/2010/04/22/autonomy-creative-account...</a> for example. And note that HP and Autonomy were close partners, HP sells and deployed Autonomy's software. It's not like they have only worked together occasionally.<p>This kind of stuff is everywhere.<p>Disclaimer: worked at ex-competitor.
Wow, what would anyone do with billions of dollar if their reputation is hit so hard? I'm actually curious about moral position of people who engage in such frauds. Is there any research on such white-collar "crime"? What motivates them and why?