As the Autonomy takeover story appeared earlier on in the thread and the takeover has now blown up…
Autonomy - Redux.
Lynch is gone, as are a large chunk of the management team, and even though HP is currently a profoundly dysfunctional company some of Megs comments the last few days are startling, even by dot com standards. She is preparing the stockholders for some brutal Autonomy related write downs over the next few quarters. Quite separate from the HP disaster area.
Evidence for the prosecution…
The sales graph is particular interesting in light of what I wrote at the time…
My guess is that when HP moved in and applied their accounting practices to Autonomy’s financials they found a situation regarding booking sales (and realizing income) that was somewhere between Lucent under Fiorina in the late 90’s (marginally to fully illegal) and Computer Associates under Kumar (absolutely fraudulent). In strict accounting terms Autonomy sales revenue had been at best greatly overstated at worst technically non existent. Booking potential future revenue cash flow in full as actual income in this quarter…etc.etc.
What usually happens when a big guy buys a stinking heap of shit like Autonomy is that those divisions that are straight fraudulent regarding booking sales are shutdown and sold off. So the Interwoven and Vertity product lines will most likely be sold off as they do not fit in to any HP survival strategy and the UK division will be shutdown. In these circumstances the UK division will probably be bought out by former management and will potter along as a small company, $30M plus. Pretty much what it was before it started its debt driven US acquisitions spree.
If the overstating of sales was really as bad as the graph indicates then final HP losses on the deal will be the full sale price. Because Autonomy was never worth (at best) more than revenue. Autonomy will prove to have been the second most expensive high tech acquisition accounting fraud loss. But AOL is still the king. Yeah, sure, marketing expenses can be capitalized. AOL never made a cent profit during its whole existence. That little accounting fraud cost Time Warner somewhere north of $40 billion. So HP’s $10 billion loss on Autonomy is still small change.