Harsh View on Autonomy
December 24, 2012
HP, one of the big names in printing, received bad news in late November when they became aware that spending billions of dollars on Autonomy was an $11 billion dollar mistake. Tech Eye reported on the Hip’s blunder in “Autonomy Was Practically Vaporware.” According to the article, when HP began to inspect their new acquisition the company noticed that Autonomy’s leading software was not as advertised and had to be given away free to customers. Meg Whitman, HP’s CEO, accused Autonomy of misrepresenting their software and used accounting tricks to hide the truth.
HP bought Autonomy in a move to leave the PC world behind and concentrate on developing software, like SAP. Autonomy’s flagship IDOL is nothing more than a search engine. IDOL along with other software would be bolted onto customers’ existing systems and Autonomy would tell them they would have to pay more money for the “upgrades.” It was a trick that worked for a while, but HP caught on.
“So why on earth didn’t HP spot this lemon when it bought it? HP has accused former managers of ‘a willful effort’ to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers. These misrepresentations and lack of disclosure severely impacted HP management’s ability to fairly value Autonomy at the time of the deal, the company said. Even calling customers would not have uncovered the problem. Many of them are embarrassed to admit they spent $10 million on software that doesn’t actually work, one HP insider said.”
Oops! Embarrassed is right. It is one thing to admit you broke a window and another to say you lost $11 billion. HP is going to have an even harder time digging itself out of financial ruin now.
Whitney Grace, December 24, 2012
Sponsored by ArnoldIT.com, developer of Augmentext
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