HP, Bribes, and an Autonomy Flip

September 13, 2014

Try as I might, I cannot avoid learning about Hewlett Packard. For a $100 billion outfit, the flow of information is not overwhelmingly positive.

Earlier today, I worked through several stories. Perhaps you have absorbed their contents? If not, here’s my take.

First, several years ago I saw a document describing Autonomy’s business. The link to the “Autonomy Overview,” dated January 2011 is at http://bit.ly/1tNtn5H. The link to a second document is at http://bit.ly/1uMLmKg. (A happy quack to Oracle for keeping these useful documents online and available.) One of the most important factoids in the two documents is that there appeared with the Qatalyst Partners logo. Quatalyst is associated in my mind with Frank Quattrone, a person of interest for his financial wizardry.

The write up “Exclusive: HP Exploring Sale of Photo Sharing Service Snapfish – Source” may be off center. I did note this this statement in the write up:

Shutterfly hired Frank Quattrone’s Qatalyst Partners over the summer to find a buyer, and is expected wrap up its process in the next several weeks, people familiar with the matter have said previously.

Perhaps HP’s sale of Snapfish will demonstrate that Mr. Quattrone will be bested in this minor joust. HP’s encounter with Mr. Quattrone’s analysis of Autonomy seems to have dazzled the printer ink company to some degree.

Second, “HP Pleads Guilty to Bribery and Is Fined $108” asserts that HP fought the law and the law won. I learned:

In a statement, the US Department of Justice (DoJ) said HP Russia admitted that its executives paid bribes to officials of the Office of the Prosecutor General of the Russian Federation to win a large technology contract in 1999, and continued making illegal payments for more than a decade. “[HP] subsidiaries, co-conspirators or intermediaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said DoJ deputy assistant attorney general Bruce Schwartz.

Fascinating when I put this business approach in the context of HP’s actions related to Autonomy.

Third, I read “Former Autonomy Execs Turning to Unusual Strategy in Fight with Hewlett-Packard.” The article reports that Autonomy asserts that “HP grossly overvalued their firm.” That makes sense to me. HP appears to have been bitten by the Big Data, predictive analytics and search bug. Like Ebola, the infection can lead to some challenging problems.

Also, I read “HP: We Will Eradicate the Color Grey from Our Market.” HP seems to have some folks who are selling HP products around the formal partner procedures. The article reports:

Alex Tatham, MD at HP distributor Westcoast, said he is “delighted” that HP is tackling a market that has the potential to suck profits from the authorised channel. “All vendors need to police the grey market; it is their responsibility to create as level a playing field as possible for resellers,” he told us. Some in the industry will say that the grey market is, at least, partly fuelled by the vendors themselves, whether it be leaky supply chains or the temptation to sell to brokers to make kit disappear amid slow sales.

Net net: HP is a company able to capture headlines. I wonder if Kim Kardashian’s media impact has inspired the $100 billion company?

Stephen E Arnold, September 13, 2014

Google and Customer Support

September 12, 2014

I don’t expect anything from an outfit providing customer support. I don’t expect anything from search vendors with customer support systems. The name of the game is no costs. To eliminate costs, customer support operations have some options.

  1. Ignore the inquiries. I recall that a member of my family used this method for a large search system. He figured that the time required to handle inquiries would bankrupt the company. Ergo: Hit delete.
  2. Buy an automated system and let it run. This usually requires paying a vendor to set up the system and “maintain” it. This works a bit like winning on a digital slot machine.
  3. Try to perform customer support. Move the operation to some lower cost location and deal with the revolving door that leads to 20 to 50 percent turnover.

Many companies use these options in combination.

According to Computerworld (yep, it seems to still be in business unlike other units of IDG’s empire), Google has to shift from option one.

“German Court Requires Google to Stop Ignoring Customer Emails” reports:

Google users who email the address “support-de@google.com” receive an automatic reply notifying the emailer that Google will neither read nor reply due to the large number of requests sent to the address. After that sentence, the automatic reply directs Google users to various online self-help guides and contact forms. This form of communication is incompatible with the German Telemedia Act, which says that companies must provide a way to ensure fast electronic communications with them, the VZBV had argued. The organization described Google’s support address as a black box in which messages disappear into a void. The court agreed with the VZBV and ruled that an automatically generated email does not meet the requirements of the law.

There you go. Google may shift to another option. Perhaps a search engine vendor will land the contract. Will the German court like that approach? I will wait with German pointer like fixation.

Stephen E Arnold, September 12, 2014

Note that IDC is the outfit that sold my content on Amazon without my permission. The “expert” who is surfing on my name is Dave Schubmehl. The German court does not seem to pay much attention to this, however.

Another Weekend, More HP Autonomy Mud Slinging

September 6, 2014

I read “HP Alleges Autonomy Email Warning of Falling Revenues and ‘Imaginary Deals’ Shows Fraud.”

HP released an email from Autonomy’s CFO to Autonomy’s president. It would be helpful to have a larger number of emails and some context for a message sent from a mobile phone.

According to the write up:

HP claims the disclosure supports its allegations of fraud against Dr Lynch, who was then chief executive of Autonomy. It has today accused him in a Californian court of lying “to an extraordinary extent” about the performance of his company during the due diligence process that led to its $11.7bn (£7.1bn) acquisition.

If Autonomy were in such bad shape, how did HP miss these signals?

HP is going to keep Autonomy in the center of its content marketing campaign. The charges and counter charges underscore the risks associated with search and content processing software.

Stephen E Arnold, September 6, 2014

HP Sues Autonomy…Again

August 27, 2014

We thought that HP and Autonomy had settled their differences and were moving towards building new products, but they are not. ZDNet says that “HP To Sue Former Autonomy CFP Over Bungled Acquisition Settlement.” What is HP upset about now when it comes to Autonomy? It turns out that former Autonomy chief financial officer Sushovan Hussain did not want to pony up the money HP was owed after its three lawsuits with HP were settled. The lawsuits were supposed to end the quarrels.

After HP bought Autonomy, they discovered the company was than truthful about its star product line. It was purchased for $11.7 billion, but HP had to write down $8.8 billion when they discovered the fib. Autonomy still does not want to pay for the damages and Hussain is avoiding the settlement.

“In a court filing on Monday, HP said that it was ‘ludicrous’ that he should be “permitted to intervene and challenge the substance of a settlement designed to protect the interests of the company he defrauded,” according to the Reuters news agency. But Hussain said that should a judge approve the settlement, HP would be able to ‘forever bury from disclosure the real reason for its 2012 write-down of Autonomy.’”

Here is to hoping the arguments settle soon, because it is really ruining the concept of enterprise search. Think about it, if Autonomy’s enterprise search products did not work as advertised, what is the value of other companies?

Whitney Grace, August 27, 2014
Sponsored by ArnoldIT.com, developer of Augmentext

HP Autonomy: A Twist?

August 26, 2014

I read “U.S. Judge Casts Doubt on HP-Shareholder Settlement in Autonomy Lawsuit.” The write up seems to point to another chapter in the Hewlett Packard Autonomy litigation. If the article is spot on, I learned:

U.S. District Judge Charles Breyer said the settlement contained a “potentially fatal” provision, under which HP would hire shareholder attorneys to pursue claims against ex-Autonomy executives. He said that provision may prevent his approving the deal.

Assume this is correct. HP would have to go back to the drawing board with regard to a shareholder allegation about the deal. Instead of putting Autonomy on the hot seat, HP may have to deal with shareholders who see HP management as having some flaws.

Instead of reading about Mike Lynch, we would be getting some insight into what the HP board and folks like Meg Whitman were thinking about search and content processing.

My view is that enterprise information retrieval is shadowed by a somewhat gray cloud. If search is the Big Thing, the value of these systems should be evident. Instead we learn that search is a contentious issue. I am curious about the reasoning HP used to justify buying an enterprise search and content processing system that was 15 years young? Once that decision was made, what MBA magic was at work to produce the purchase price? What was Meg Whitman’s contribution to this deal when it took place?

Do other search vendors benefit from the notoriety of this search deal? My hunch is that the flailing many search vendors’ marketing demonstrates is that search is not an Emmy winning solution.

Search is easy to misunderstand and difficult to covert into a money machine. The HP Autonomy matter is a living, breathing case study of that does call attention to the challenges search presents. For those seeking cases studies about search, the HP Autonomy matter is a headliner.

The matter is a reminder that search which everyone thinks he or she understands may not be quite so simple.

Stephen E Arnold, August 26, 2014

HP Autonomy: A Mysterious Action

August 19, 2014

I just read “The Mysterious Case of Hewlett-Packard’s Autonomy Deal.” The HP and Autonomy PR professionals have some work to do. Heck, search and content processing vendors have some work to do. The unflagging interest in the purchase of the largest enterprise search and content processing vendor (Autonomy) by one of the largest sources of printer ink (Hewlett Packard) is drawing attention to the risks associated with information retrieval.

The write up from Therese Poletti’s Tech Tales is an example of how a utility function like search is sporting a black eye, a chipped tooth, and a broken nose. Ugly.

The mystery, as I understand the article, concerns writing down “almost $9 billion of its $11.1 billion acquisition of the British software company, Autonomy Corp.” The article reports:

one of the law firms that represented the shareholders in their case against H-P directors, Cotchett, Pitre & McCarthy LLP, now working with H-P, is being accused of a conflict of interest. Cotchett was previously the lead counsel in another class action against H-P. That suit, which also recently settled, alleged that the company’s inkjet printers falsely warned consumers when they were out of printer ink.

I savored the “falsely warned” phrase.

The article reports:

“The inkjet litigation has no bearing on the Autonomy settlement,” an H-P spokeswoman said in an email. “We believe the motion to intervene in the derivative case is just a lawyer-driven attempt to seek attorneys’ fees. It is meritless, as will be shown in court filings.”

And the mystery of the write down? The article asserts:

H-P has said that $5 billion of the write-down was due to accounting improprieties at Autonomy. But so far, the accounting problems found at Autonomy are said to be around $200 million in either hardware sales at a loss or fraudulent transactions, out of just over $1 billion in annual revenue. How this became a multi-billion-dollar write-down is a big question among investors. Perhaps these legal maneuvers will shine some light on the mystery. But it probably will be a long time before investors know what really happened.

The mystery is not yet solved. Life, it seems, does not work out like a US television crime drama. I await the next installment of “The Write-down Mystery.”

Stephen E Arnold, August 19, 2014

Netscout Gartner Document

August 14, 2014

I learned that some folks were not able to locate the Netscout Gartner document referenced in this Diginomica article. You may want to try and get the 27 megabyte court filing at http://slidesha.re/1pPsY21.

This is definitely worth some face time. Parts evoked in me a “stop repeating yourself” but other bits were juicy indeed if true. Plus, there are some allegedly accurate factoids in the document and an illustration purporting to show the Gartner products and services. Keep in mind that this document presents only Netscout’s point of view. I find the information in the document compelling and thought provoking. For me, Netscout’s array of data seem close to reality.

If I come across the Gartner response, I will try to remember to post an item in Beyond Search. But as a former nuclear consultant who was lured into a top tier consulting company, who knows? I have my attention riveted by an IDC swizzle which allowed my content to be sold on Amazon without my permission and with another person’s name on it. Clever stuff these “experts” find to do.

I highly recommend the slide on page 27 of the Netscout legal document. I would like to include it in this short write up, but I don’t have a dog in this Netscout Gartner squabble.

Stephen E Arnold, August 14, 2014

Google Not Winning On Removing Information

July 31, 2014

Google has faced numerous lawsuits about having content removed from search results. International Business Times explains about a current battle in the UK: “Google’s Right To Be Forgotten: 70,000 Politicians, Criminals, And Individuals Want Offending Content Erased.” The European Union Court of Justice ruled in May that European citizens have the “right to be forgotten” and thusly their information removed from search results. Google’s received over 70,000 takedown requests. Google argues that it helps people keep their reputations intact and able to recover from past mistakes.

Google has removed many links related to UK media organizations. As one can imagine, users are not too happy about this, because the common belief is that once it is on the Internet it should be free to all.

Google says the opposite.

“ ‘The issues at stake here are important and difficult, but we’re committed to complying with the court’s decision,’ writes [David Drummond, Google’s chief legal officer]. ‘Indeed, it’s hard not to empathise with some of the requests that we’ve seen – from the man who asked that we do not show a news article saying that he had been questioned in connection with a crime (he’s able to demonstrate that he was never charged) to the mother who requested that we remove news articles for her daughter’s name as she had been the victim of abuse.’ “

Google’s created an advisory council to handle all request. They even post the question “How should one person’s right to be forgotten be balanced with the public’s right to know?” on the page. It is a philosophical question, but it appears to be taken on a case by case basis. How long will Google be willing to do that?

Whitney Grace, July 31, 2014

Sponsored by ArnoldIT.com, developer of Augmentext

Former Autonomy CFO Tosses Legal Flechette at HP

July 22, 2014

I read “Former Autonomy CFO seeks to Block HP-Shareholder Settlement.” You may have to answer some questions to see the document or try to log in to the paywalled Financial Times’ Web site. Yep, that’s the wonky orange newspaper that is a must read in London, but not so much in Harrod’s Creek, Kentucky.

The story seems to be straightforward. The former chief financial officer of Autonomy has “filed a legal motion to block” the Hewlett Packard shareholder deal. The idea is that if shareholders agree to let HP off the hook for its acquisition of Autonomy and the fascinating $5 billon write down, then HP will go after Autonomy. The law firm assisting HP will be the same outfit that helped shareholders sue HP for the deal in the first place. Got that?

The Financial Times quoted Mr.Hussein’s legal document about the legal action:

“HP seeks to forever bury from disclosure the real reason for its 2012 write down of Autonomy: HP’s own destruction of Autonomy’s success after the acquisition. And, by the broad bar order it seeks, HP seeks to absolve itself of its own responsibility for its losses.”

The FT did not include the link to the actual filing. You can find it at this link.

The issue, according to the Autonomy CFO’s document is that HP is using the shareholder settlement to bury certain facts about HP’s handling of Autonomy. Autonomy’s argument is that HP fumbled the ball after it conducted due diligence and bought Autonomy.

Autonomy wants HP to provide proof that Autonomy fooled HP, its Board, and its consultants. The idea is that Autonomy allowed these folks to review the financials, the marketing collateral, and other sources of information before deciding to buy Autonomy for $11 billion.

I am no longer surprised by the claims and counter claims. Several observations:

First, search and content processing as business sectors generate a disproportionate amount of thrashing. HP analyzes Autonomy. HP buys Autonomy. HP sues Autonomy. Shareholders sue HP. An individual no longer employed at HP Autonomy sues HP. Etc., etc. Fast Search was the leader in post sale legal maneuvering. Autonomy seems to be following the “fast” track now.

Second, HP bought Autonomy and then said it was tricked. Remember this is not like buying a bagel. Autonomy bought a company with thousands of customers and hundreds of million in revenue. If a bagel is bad, I either demand a different one or walk to another bagel shop.

Third, the acquisition took place three years ago. In that time, the enterprise search sector has been subjected to considerable pressure. Just  check out the latest Gartner Magic Quadrant, G00260831. Notice that Elasticsearch (the fastest growing search system) is not in the Gartner analysis. The Gartner enterprise search report appears to mirror the nature of the enterprise search market itself. The HP Autonomy matter AND the preceding Fast Search & Transfer matter have, in my view, contributed to a general malaise for the search and content processing software. The equation in my mind works like this: Buying a search system = Trouble.

Net net: With the parties to the matter allowing their attorneys to put the pedal to the metal, there will be more excitement in the near future. Billing functions at law firms have steamrollers to operate.

Stephen E Arnold, July 22, 2014

HP, Autonomy, the Vatican: Business Process Case Example

July 21, 2014

On Saturday (July 20, 2014) I read “Exclusive: Vatican Dispute Sheds Light on HP Case in Troubled Autonomy Deal.” The story notes that Reuters saw  “a letter.” Because there was no link to the letter, I decided to wait and see how other “real” journalists reacted to the story.

I found “HP Autonomy Legal Case Takes Religious Twist with Vatican Deal Mystery” interesting. The article does a good job of summarizing Reuters’ recounting of Autonomy selling software to a reseller. Autonomy booked the revenue. The reseller in the US assumed the job of bundling up the software and services and collecting from the Vatican.

Several questions crossed my mind as I through about the original story and the rehash from the V3.co.uk Web site:

  • Is this process different from the one used for selling or leasing an automobile through the value chain at a local Lexus dealership?
  • From where did the copies of the source documents come? Under what circumstances? Why? How?
  • Are other enterprise software vendors using different financial transaction methods? What are some examples germane to the HP Autonomy Vatican case example?

In my experience, there are many ways to sell or license software and services. These range from the open source or freeware approach to the pay for to get a license to use the proprietary deliverable (whether tangible or intangible). Vendors and customers choose an approach that meets the needs of the parties to the deal.

I ask myself, “Is this case example information, reformation, disinformation, misinformation?”

Stephen E Arnold, July 21, 2014

Next Page »