What's with the tech sector?


The problem is that in the high tech world they are all little more than bit players. Valuation is a made up number to give the VC’s cover with their investors. Revenue is everything. 50m revenue may be huge by UK standards but little more than loose change in this business. The consumer software division I TD’ed 20 years ago had revenue of $40M, when the business had one tenth the revenue it does today, and my product group in the bigger scheme of things was a piss-ant little operation.

ARM’s revenue is, what $700M, and Autonomy about same. (Which means their real market value is .9 to 1.1 revenue). That puts them in the upper third division. Not small companies, but not big either. Just middling. But neither dominate or control a major sector. Outside mobile ARM dont do so well and there are far better margins in the other parts of the embedded market. Unstructured search? Who cares. Verity showed that outside the spooks market there is no money to be made. And they’ve been trying for more than 20 years.

What is very interesting is that in the valley Israeli companies have a far bigger presence than any European country. They are exceptionally good at growing companies in very well defined and targeted sectors and for those companies to survive and proposer. There are lots of Israeli high tech companies in the $100M to $500 space. Dozens of them.


I have to agree. Israel should be a beacon for Ireland in the way it has developed it technology sector, both hardware and software.

Ireland is just a body-shop for Us multi-nationals with no real vision in the local IT sector. There are very few Irish companies of any real size or substance in this area. Government policies perpetuate this. THere has never been a policy to exploit the skills and experience being obtained in these companies to develop local companies. Digital Hub my arse.


Dream on - there’s simply no investor cash in ireland (or close as makes no difference - since we’re talking 50K for 50% joke type operations). The average israeli VC spends more on stationary than the average irish one does on investments.


And we have bugger all entrepreneurial bodies in Tech industry compared to Israel; every Israeli I’ve ever met wants to be their own boss, the Irish are way too happy to stay in their little rut. Our education system is also below pitiful compared to theirs. Just compare the number of PhDs, & their disciplines, between us & them. You could probably fit all the Mathematics PhDs in Ireland in the Stags Head; you’d probably need Croke Park for the Israelis :neutral_face:


Careful now, mustn’t herd the Israelis into a stadium…


Israel has a tech sector because it has a weapons industry.

Frankly I’d rather not go there.


Not sure how I managed to click into reading a thread about the tech sector, as I must be the least techie-minded poster on the entire Pin, but this has just reminded me of the first time I realised that the whole ‘smart economy, tech-sector, digital Irish economy is the future’ stuff was claptrap. Moved into a flat in the early noughties and, when getting my landline connected, enquired - I guess with Eircom or was it still Telecom Eireann in those days? - about getting an internet connection. ‘Yes, we do have that service in some areas’, came the answer, ‘but it’s not anywhere in the vicinity of your flat and we have no plans at present to lay the pipes/cables/wires/whatever-it-was-10-years-agp-that-made-the-internet-work-for-run-of-the-mill-citizens anywhere near you in the foreseeable future’.

This might have been understandable if I had lived in outer Leitrim.

My flat however was just off Thomas Street, perhaps 300 metres at most from the Digital Hub …


I’ve been following autonomy since around 2006. And it seems to of that what makes then valuable is not their unstructured search in particular. More that elements of their technology have potential to help make real inroads into a semantic web.


Me arse. Israel has a weapons industry because for most of their existance they’ve been in a state of war with two or three of the neighbours & massively outnumbered. The only thing stopping the entire Syrian army rolling thru the Golan was the certain knowledge that the Israelis would turn Damascus into a very large radioactive hole in the ground !

Israel has a technology industry because they recognised from the foundation of their state that they had no natural resources to start the traditional manufacturing industries, & they had to make the most of what they had. We on the other hand had Eamon DeValera & “comely maidens, dancing at the crossroads” bollixology :unamused:

Do a straw poll of the winners of the Nobel Physics prizes for the 20th century & see now many were Jewish. We’ve churned out some brilliant Physicists, but from Trinity, & up until not so long ago if a Catholic kid wanted to go to Trinity they had to go ask their fucking Arch-Bishop’s permission, so they wouldn’t get led astray by those damned Prods :sick:


I’m well aware of the short comings of the UK tech industry. Successive lazy governments, an apathetic media and an ignorant investment industry have all contributed to its underachievements. In America it is very different with obvious results.

Still, this makes Autonomy’s achievement even more remarkable. I know it’s fashionable to be negative on the Pin, but to seal a $10.2bn valuation from zip in 15 years is not to be sniffed at? You say you checked them out 10 years ago and they were “going nowhere”? I beg to differ. The share price has risen 2400% since then. Let me know if you see a business “going somewhere”. :laughing:

Hmmm…From what I can see, the market for unstructured search has exploded over recent years. Autonomy saw it coming, which is why they swallowed Verity six years ago.

Oh yes. The Israeli’s know how to incentivise innovation alright. Shareholders interests are…how can I put this?..a little less important? I’m not making a blanket statement, but tread especially carefully. If the company is domicled in the US, that’s a positive.


I think blaming the Church is a bit silly - there are places other than Trinners!; a few Prods have made great contributions (Walton was the son of a CoI Clergyman IIRC) but over all the emphasis on maths/science was piss poor (just like the UK) despite DeValera being a maths teacher. It’s not like young Kings Hospital chaps are encouraged to read theoretical physics rather than getting an apprenticeship with MOPS!

Israel has top class Universities with great staff- where’s Ireland’s Technion (or MIT)? Instead there’s an “IT” in every kiss me arse town - though the original designation (after DIT) was for Waterford - CIT made a unilateral declaration of IT Status and not it’s a meaningless designation! There’s too much duplication of courses rather than striving for excellence/specialisation


Completely agree about Israelis. I’ve worked with a whole bunch of them plus one pretty successfully startup (only a $500M company after 5 years where it topped out). Basically as combative as Russians but with the saving grace of a sense of humour. Everything turns into an argument but the argument always end with a joke to wind it down. And never any hard feelings afterwards. Very unlike the Russians.

The culture is everything. A first rate education systems plus a wont take no for an answer approach to every problem. The fact that everyone serves in the IDF also makes for a very egalitarian management system. Rank in the IDF is brutally meritocratic so you often end up with the situation where the company pecking order is very different from the IDF pecking order. Which make management far less overweening. It was funny to see the CEO, with one multi-billion starup to his name and a swagger to match, be deferential to one of the mid level engineering guys because the CEO never rose above Sergeant whereas the engineer was an air ace who had lead a squadron against the Syrians. The VP of engineering had been a tank commander who had lead the charge across the Sinai to Cairo in '73. He was later a professor at Columbia. The Israelis in the company were all in awe of him.

I suppose with a culture and background like this its not surprising that they do so well in start ups.


They were going nowhere because I’m actually in the business of creating products and growing companies. Which is the complete opposite of investing. In fact if you actually care about creating great products that are innovative and useful and companys with a long term growth path you see “investors” as little more than parasites who destroy good companies and good products on a sickeningly regular basis. In fact post '97, when the old VC model was broken by the SEC, investors in almost all their forms have taken a huge amount of value out of the industry. What innovations have happened happened despite them not because of them.

So you consider Autonomy a success? I dont. There is some interesting technology in their products but they are not going to innovate on it in the future and a big chunk of their revenue was little more than acquisition filler. So HP stockholder were stiffed for $10B for a company that is worth maybe 800M. And due to the invariable path of acquisitions will be reduced to a core revenue of maybe $200M in 3 years time as units are shut down or “spun off”. Just like the Palm acquisition was.

How is this a success?

I see little difference between your 2400% return and going to Reno and getting lucky and winning on the slots. About the same level of social utility in my books.

And just like one of the other big UK software “successes” of the last tens (although a 30M acquisition in my books is almost an accounting error) within a few year it becomes little more than a sales office for the American parent thereby denying a new generation of people of gaining real experience in a growing company. Its those people, and the experience they gain, that you build successful tech sectors out of.

To investors an acquisition may be the sign of success, the cash out event, but to those of us in the product end of the business the vast majority of acquisitions are an admittance of failure. That the current management are just not up to the job. And a sign that the company is heading for extinction in a fairly short order. The product name may survive as a brand but the team that created it will be broken up in short order and soon long gone.


Your insight is fascinating. Please tell us more and I will apply the Costanza Principle.


As I said. All I care about is getting product into the hands of satisfied customers. Investors add zero to this process, in fact they are a huge hindrance. In the old days VC’s added some value to the process, as a source of capital to grow rapidly expanding companies, but that changed when Title 144 was changed in 97. Now its a pure scam. VC’s screwing their investors and then selling their investments to each other.

As I read it you are quite happy to try to personally profit from this scam. And you also sound like one of the small time amateurs who usually get reamed. Just like they did during the dot com bubble. So tell me, apart from playing the tech stock lottery, how exactly have you added any net value to the high tech industry in the last decade or two? Or as I stated before, are you just another parasitic investor looking for a quick buck? Because if you are, I am the last person to ask for stock hints because even though I have a very good idea which stocks are currently being pimped for pump and dump, I most certainly would not give you any pointers what to look out for. Because in my books its basically aiding and abetting fraud.

I also suspect your life is a lot closer to George Costanzas than mine. Its the Georges of the world who are always looking for some sure fire stock tips that will make them an easy buck rather than actually producing something useful that people actually want to buy. I have no problems with buy and hold investors in mature sectors but high tech stock has always been scam central and as such, you are welcome to it. A fool and his money etc etc…


Seriously JMC, I find the failure hard to spot.

$’000 (except EPS) 2010 2009 2008 2007 2006 Revenue ....................... 870,366 739,688 503,229 343,409 250,682 R&D Expenditure................ 114,752 98,785 78,410 62,341 51,680 Profit from Operations (adj.) . 376,566 328,905 207,482 108,774 68,111 Profit Before Tax (adj.)....... 378,921 323,066 208,892 113,245 69,148 Net Profit (adj.) ............. 292,216 232,798 148,001 77,237 47,919 Cash from Operations .......... 363,230 286,572 178,783 83,108 46,948 Fully Diluted EPS (adj.)....... 1.11 0.97 0.68 0.38 0.26 Fully Diluted EPS (adj. IFRS).. 1.2 0.97 0.68 0.38 0.26

Bear in mind the goodwill on the balance sheet is 1.4B so they hardly overpaid for all that “filler” revenue they bought.


You couldn’t be more wrong about me or my trading.

As for getting product in the hands of a satisfied customer I’ve already described my Sony experience vs. my Apple experience. Pants vs. Quite Good.

There’s a reason Apple is sitting on a pile of cash. You appear to ignore cash in favour of HFT conspiracy theories


Serenity now…



Lets see. Verity had 120M in revenue when acquired for 4 times revenue. Interwoven had $275M in revenue when acquired for three times revenue. The other acquisitions might produce 10% revenue max, say 80M. That would be well over two thirds of Autonomy revenue assuming pre acquisition growth rates / post.

I dont see 10Q and 10K’s for Autonomy and the annual report is utterly uninformative. Whats the UK equivalent of the 10K or is there one? 10Ks an 10Q’s nearly always have detailed breakdown of divisions results. If they dont you know they are hiding something very big. P58 of the Annual Report, Segment Analysis, is complete bullshit. I’ve been reading the 10Q’s of tech companies that do acquisitions for more than 25 years, and I’ve worked for a bunch of them, and thats not how it works. Ever.

Very very weird. They must be trying to hid something very big. A high leveraged acquisition shell with something to hide. Why am I not surprised. I’m starting to see shades of Barry O’Callighan here. I’m very familiar with the nut and bolts of the CA scam and the great Wordperfect pre-IPO implosion (bizarre accounting practices) and something smells wrong. Autonomy were a 60M company with low growth rate until they acquired Verity in 2005. The next big jump in revenue was with Interwoven in 2009.

I think HP may have done a Mattel with this deal… Grossly overpaying for something that was very much far less than the sum of the parts. Mattels acquisition of The learning Company almost destroyed it and lost them 90% of the $3B plus acquisition price in a very short period of time.

The whole Bayesian core technology stuff OEM story seems like it may be just a smokescreen for the fact that most of its revenue comes from the traditional product lines of its acquisitions. Not that we have not seen that before. Compare and contrast with Symantec, Adobe and Avid/Pinnacle to see what legit growth by acquisition companies look like.

So maybe they did not overpay for the filler revenue after all. Not if they got HP to stump up 12B for what is little more than a highly leveraged $800M house of cards.


I’d forgotten that. The best Anger Management class scene I’ve seen on TV was in the Dennis O Leary show “The Job”. Unfortunately not on youtube. Once seen, never forgotten…