HP Autonomy: Back in the News

December 2, 2018

I read “Ex-Autonomy boss Mike Lynch, finance VP Stephen Chamberlain charged with fraud in US.” The main point is that Mike Lynch (founder of Autonomy) and an officer of Autonomy have been charged with fraud in the US. The allegations of fraud are a consequence of Hewlett Packard’s purchase of Autonomy in 2011 for $11 billion. Autonomy was a company engaged in licensing its information processing technology. The $11 billion price tag was, I believe, the most paid for an information retrieval company. HP subsequently decided that it had to write down $8 billion of the purchase price because Autonomy was not generating the type of revenue HP anticipated. The story provides a run down of some of the highlights of this remarkable purchase and the subsequent legal disputes and allegations about the deal. Beyond Search does not have a horse in this race.

Several observations can be offered from rural Kentucky:

HP paid a significant amount of money, and it appears it did not understand the business of information retrieval, its revenue potential, or the mechanism for maintaining the accounts
HP subsequently split into two companies and wound down its software businesses apparently realizing that the company had to reinvent itself
Management change at HP has been once characteristic of the company. This in itself may have resulted in HP not doing its homework and checking the match before handing over the check for the deal.

interesting case study with a number of key business issues in play; for example, What did the accountants and auditors do? and What management consulting firms worked on the market analysis for the Autonomy suite of tools?

Interesting with more to come. And don’t forget: My team did some small research projects for Autonomy because it was in the search business, and I was once informed about that business sector. But $11 billion? Quite a valuation.

Stephen E Arnold, December 2, 2018

Written by Stephen E. Arnold · Filed Under Legal matters, News, Search

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Stephen E. Arnold monitors search, content processing, text mining and related topics from his high-tech nerve center in rural Kentucky. He tries to winnow the goose feathers from the giblets. He works with colleagues worldwide to make this Web log useful to those who want to go "beyond search". Contact him at sa [at] arnoldit.com. His Web site with additional information about search is arnoldit.com.