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

HP: Chasing Autonomy Execs the Next Big Thing

June 28, 2014

I read “HP Will Settle 3 Lawsuits Over Its $11 Billion Autonomy Acquisition, Urge Shareholders To Sue Autonomy.” The settlement approach makes sense; otherwise, attorneys would be able to purchase the total output of McLaren and Ferrari before a final decision stumbles from a courtroom.

The write up states:

To recap: less than a year after buying British software maker Autonomy for $11 billion, HP wrote off $8.8 billion and alleged that Autonomy had improperly inflated its revenues and margins, to the tune of $5 billion. HP called it fraud, named a whole bunch of ways it believed Autonomy had done this, and asked for investigations by the authorities.

But the portion of the article that caught my attention was this passage:

The shareholders will agree to drop all claims against HP’s executives and board members, including CEO Meg Whitman, but they will be free to pursue former officials at Autonomy. Plus, the shareholders’ attorneys will “receive fees for helping HP pursue any further claims” Reuters reports.

My take is that HP wants to covert Sir Michael Lynch from the most successful software entrepreneur in England to scapegoat. The only hitch in the git along is that HP bought a company after Board approval.

Fascinating, but the approach may lead to a fundamental breakthrough in computing. That processing power can be applied to HP decision theory problems. Now that Autonomy IDOL is a cloud service, I assume a computer revolution is not too challenging for HP management.

Stephen E Arnold, June 28, 2014

A Map of Craigslist Crimes

June 11, 2014

A reporter over at The Daily Dot has used data from news stories to answer a point of curiosity, we learn from “Mapping 30 Days of Craigslist Crimes.” It is not news that some people use the classifieds site to perpetuate crimes. Writer Aaron Sankin wanted to know more, to get a “big-picture perspective” of these events. He and his associates mined data from news articles to compile a map of incidents that occurred in April of this year. There are 74 crimes represented on the resulting Google-generated map, though Sankin hastens to note that this sampling cannot be considered comprehensive; these are only the crimes that were both reported and considered important or interesting enough to make the news. Still, it is an interesting analysis.

Of these 74 incidents, eleven resulted in violence and three in death. The most common fell into the robbery/ attempted robbery/ assault categories. That’s why it’s wise to meet online contacts in a well-lit public place, of course. Interestingly, Sankin tells us, a Chicago police department has gone so far as to invite people to complete online-initiated transactions in their lobby or parking lot.

Other, non-violent crimes the team found included the appearance of stolen property on the site and failure to pay for goods. Then there was this apparently common scam:

“One particular type of crime stood out both for its specificity and prevalence.

“The scam typically involves the victim responding to a listing for a rental property and corresponding with someone he or she believed was (or represented) the landlord or property manager. The victim would be sent pictures of the property but not actually be let inside. The victim would then be instructed to send a security deposit and/or the first month’s rent, often wiring the funds to an out-of-state account, and they would then receive keys to the unit.

“Of course, those keys never came and the suspects with whom the victims were corresponding with had no actual connection to the property owners—they simply found an unoccupied housing unit and used it to swindle money out of unsuspecting people.”

So, watch out for that. The article recommends anyone looking for property through Craigslist perform a Google reverse image search, which will reveal whether the same images appear in multiple property descriptions. For good measure, he also includes Craigslist’s own list of best practices, like not giving out financial information or inviting strangers into your home. Most of it is common sense, but it’s worth a refresher for those considering a Craigslist transaction.

Cynthia Murrell, June 11, 2014

Sponsored by ArnoldIT.com, developer of Augmentext

File Sharing Torrent Site Goes Down

May 26, 2014

I read “Largest Torrent Search Engine Torrentz.eu Taken Down by UK Anti-Piracy Police.” Torrent sites are often associated with motion picture downloads, but there are other types of files on these systems. According to the write up, Torrentz.eu pointed to files and did not host the copy protected content. I noted this passage:

Torrentz.eu acts as a search engine for torrents rather than storing the files itself, making the move unusual among police shutdowns. The site receives millions of visitors a day and is thought to be one of the largest torrent sites on the internet.

In my forthcoming Prague police and intelligence lectures I review sites and access methods that are providing some users to content making it possible to obtain copyrighted content. The step is encouraging to some copyright holders. The existence of alternative paths is likely to create opportunities for additional enforcement measures going forward.

Stephen E Arnold, May 26, 2014

Google: Another AdSense Allegation

May 22, 2014

These allegations about Google’s AdSense surface once in a while. I read “Google Hit by Class Action Lawsuit over Claimed AdSense Fraud.” According to the write up:

The legal action…claims that Google knowingly canceled the AdSense accounts of customers so that it wouldn’t have to pay out any revenues from internet users’ clicks.

The story then hooks this most recent allegation with an earlier allegation made by a former Googler. The article states:

The lawsuit mirrors allegations made online in April by a claimed former employee of Google who asserted that the Chocolate Factory has a huge system in place to systematically defraud AdSense users. The posting claims that the program has been in place since 2009 and also involved monkeying about with Google analytics data.

My thought is that Google does no evil. Assuming this is true, how can a series of algorithms behave  in a punitive manner. If one doubts the “do no evil” assumption, then algorithms are performing actions that could be evil. I don’t want to follow this chain of reasoning because the notion that a large corporation would have a flaw is anathemic to my world view.

I wonder how this class action matter will play out. My hunch is that parties to the matter will have to have money to try to prevail. How will parties involved in this matter generate money? Well, there’s always AdSense.

Stephen E Arnold, May 22, 2014

Hewlett Packard: Foreign Bribes and Search

April 10, 2014

I was disappointed with the news stories about Hewlett Packard’s recent hitch in its git-along. For example, I read “Hewlett Packard Agrees to $108 Million Fine for Foreign Bribes” and saw not one reference to information retrieval, search, and content processing technology. In my view, had HP used the Autonomy technology to process its internal information, IDOL and the Digital Reasoning Engine would have generated some outputs that pointed to anomalies like those the investigators found.

Apparently “findability” is more difficult than it appears even when the company in the spotlight owns one of the go-to search systems. I assumed that it would be trivial to run a few queries and produce documents and “big data” that would show that Hewlett Packard what was cooking in its subsidiaries or with non US deals.

Search apparently was not up to the task because allegations had to be “resolved by third parties.” Apparently it required attorneys and government folks to figure out that HP was taking some short cuts. Here’s a passage I noted:

“Hewlett-Packard subsidiaries 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 Deputy Assistant Attorney General Bruce Swartz in the Justice Department statement.

Business actions like those mentioned in the Silicon Beat write up make it clear that HP management may not know what is going on or may not be paying attention to existing information about company activities.

Is this an anomaly?

I can’t answer the question, but when investigators from various countries are able to find useful factoids, it raises one question:

What does HP’s much hyped information retrieval system do for company executives?

and

Was important management information not available to HP’s senior executives? If so, who filtered the digital content?

This $100 million fine comes on the heels of HP’s paying $57 million to settle a shareholder lawsuit about the “personal computer maker’s former management of defrauding shareholders by abandoning a business model it had long touted.” See http://reut.rs/1iUC0re

The persistent HP business model seems to be one that does not engender my confidence in the company.

I am not sure the IDOL search system is at fault. Does HP use Autonomy’s fraud detection components? Why not index content, run queries, and make decisions based on the heterogeneous types of information that Autonomy can process, usually with some effectiveness?

The jury’s still out on search at HP. Two big fines in a short period of time is unsettling to me because both are germane to the effective use of information retrieval technology.

Stephen E Arnold, April 10, 2014

Patent Complaint filed by BrightEdge for Searchmetrics Infringement

March 20, 2014

The article titled It’s BrightEdge vs. Searchmetrics in SEO Patent Case on Search Engine Watch warns of containing some “dry legalese”, but when it comes to patent infringements that is difficult to avoid. This particular case involves a complaint filed by BrightEdge, which claims that Searchmetrics is illegally using BrightEdge technology. Dennis Goedegbebuure, head of SEO at Airbnb explains Searchmetrics point of view in the article,

“That system was built in 2009, where we built the strategy starting in 2008, far before the patents by BrightEdge were submitted. We would check the ‘share of voice’ of any eBay page ranking for a keyword, and compare our position with the competition on multiple factors, backlinks and on-page factors; after which, we would be able to estimate what would be needed to push those eBay pages upwards in the rankings.”

This may sound like Google spoofers of the SEO variety getting legally frisky. The article explains that most innovative companies take out patents either as a defensive move against “patent trolls” or simply to avoid having there more unique ideas stolen by competitors. Patent controversies are common, and the system is clearly imperfect between combative companies and patents occasionally being awarded to the wrong company.

Chelsea Kerwin, March 20, 2014

Sponsored by ArnoldIT.com, developer of Augmentext

Google Cannot Use Blame Game In German Lawsuit

February 28, 2014

Google tends to play the innocent when people challenge the company for displaying results with lewd or inappropriate content. After all, Google simply catalogs Internet content and it can’t be held responsible for what others make, right? Wrong says “Google Loses Big In German Reputation Lawsuit” published in Search Engine Journal. Google has been sued before and played this defense. Logically it makes sense, but Google, as the article suggests, is partially responsible. Google’s algorithms rank pages in search results and the company has control over how the search engines works and how it delivers result.

The German case deals with a man who sued Google to remove detrimental photos from search results. He won suits to keep the photos from publication, yet they still appear on the Web. The judge ruled in the defendant’s favor. The article explains that this might set a precedent for Google, but:

“The target of this particular lawsuit suggests in an interview that lawsuits could help to solve this responsibility problem. In essence, he suggests that only people who have completed court cases should be able to remove their photos from Google. It seems smart, but again, I have some concerns. Lawsuits like this are very expensive, and not everyone has the money to hire a lawyer and take time away from work in order to appear in court. Similarly, court cases take months or years to resolve, and they generate a lot of web interest. As a result, people who file often find that their problems are magnified as the case moves forward, and they suddenly have much MORE data to remove.”

Hurdles aside, if someone has the time, money, and patience what is to keep them from suing Google. I can imagine an entire department at Google dedicated to controlling data removal from search results. Brin and Page are probably worrying at this moment.

Whitney Grace, February 28, 2014
Sponsored by ArnoldIT.com, developer of Augmentext

Altegrity owner of Kroll Faces Litigation and 2015 Debt Maturities

February 19, 2014

The article titled Debt Maturities May Blow the Whistle on Altegrity on the Deal Pipeline explores the possibilities facing the Virginia based company. Altegrity is a private-equity owned background check company with the subsidiary US Investigations Services Inc. (USIS). The company was responsible for vetting both Edward Snowden and Aaron Alexis (the Washington Navy Yard shooter). The article explains,

“In a complaint filed on Jan. 22 in the U.S. District Court … the DOJ suggested penalties of $5,500 to $11,000 per violation of the firm’s quality review protocol for 665,000 cases, or about 40% of the cases Altegrity subsidiary, US Investigations Services Inc., has handled. On the low end of that spectrum, the damages could reach $3.7 billion. However, the fund manager noted that Altegrity could seek to settle the case for a much lower amount, curtailing…a lengthy litigation process.”

A USIS spokesperson defended the company with the statement that the allegations only refer to a small group of people over a short period of time. One looming factor mentioned by S&P analyst Brian Milligan are Altegrity’s 2015 debt maturities, which allow the company some wiggle room for negotiation. We should also note that is the company that has owned Kroll, the corporate security firm, since about 2007. Kroll has a search component acquired from Engenium in 2006.

Chelsea Kerwin, February 19, 2014

Sponsored by ArnoldIT.com, developer of Augmentext

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