The HP-Autonomy multi-billion dollar ticklefight has escalated quickly from buck-passing to finger-pointing; in an interview today with the Wall Street Journal, Autonomy founder Mike Lynch gently explains his considered viewpoint that HP can go shove it.
For those just joining us, HP this morning declared a massive $US9 billion write-down due to accounting improprieties it had discovered at Autonomy, a company it had purchased for $US11.1 billion a year ago. It's a startling accusation, and implies depths of incompetence and fraud few would have thought even HP capable of. And yet!
But not so fast, says Lynch, who — along with most of Autonomy's senior management — left HP months ago. This has all the makings of a cover-up:
The only concept I have of it is that it does seem to be coincident with them releasing the worst set of results in their 70 year company history.
I think what has happened here is that they have got themselves in a mess.
They did the acquisition of EDS, they had to write that one down. They had to write Palm down. When Autonomy was acquired it was done by a CEO who wanted to get rid of various divisions of that business and lead with software.
He was ousted in an internal coup d'etat. From that point Autonomy was at odds with the divisions that were in power.
There was a series of mismanagement steps. They lost hundreds of the talented people at Autonomy. They whole management team basically went out of the door. Sadly they are left with the results of having destroyed all that value.
Now they are trying to cover it up with this big write off.
A serious response to a serious charge, but one that does ring at least a little true. Is it really possible that HP could own Autonomy for a whole year before discovering such a blatant malfeasance?
Well, actually, yes, come to think of it. Sad as it is, the only catch in Lynch's argument is that HP's management has been just bungled enough these last several years that a $US9 billion accounting hold is exactly the kind of thing they'd miss. In fact, the only real surprise given the board's recent history is that they didn't name it CEO, to boot.[WSJ]