OT: Wow HP….

[Coronita]

yup…Burnt toast….

Wow, just remembered when I first posted this, HPQ was like $46/share….

Just wait until the class action shareholder lawsuits come flying in…

http://www.bloomberg.com/news/2012-11-20/hp-s-accounting-claims-are-seen-as-cover-for-bad-deals.html?cmpid=yhoo

Hewlett-Packard Co.’s (HPQ) claims of financial improprieties at Autonomy Corp. have accounting experts questioning whether the allegations are an attempt to divert attention from yet another bad acquisition.
Hewlett-Packard said yesterday it recorded an $8.8 billion writedown related to its purchase last year of Autonomy, the U.K. software maker. More than $5 billion of that impairment charge was the result of accounting practices at Autonomy, Hewlett-Packard said in a statement. About $200 million of Autonomy’s revenue had been recorded prematurely or improperly, according to Hewlett-Packard’s general counsel.
“How does that translate into a $5 billion write-off?” said Lynn E. Turner, former chief accountant of the U.S. Securities and Exchange Commission and a managing director at LitiNomics Inc., an economic and forensic consulting firm. “The big issue isn’t the fraud they’re talking about. The big issue is that HP has made acquisitions that have turned out to be a disaster.”
The writedown follows Hewlett-Packard’s August announcement that it would take a charge of $9.2 billion, largely related to its purchase of Electronic Data Systems Corp. When companies make an acquisition, the difference between the value of the target’s hard assets and the purchase price is known as goodwill. That gets carried on the company’s balance sheet as an asset and is reviewed periodically by public companies.

[Diego Mamani]

Our friend Meg was interviewed by Marketplace (NPR) yesterday. The interviewer asked some tough questions… Too bad I only listened towards the end.

The questions were along the lines of (paraphrasing) “what is it that HP does?” Or, “can you explain to a consumer, in a few, plain words, what HP is?”

Meg answered that HP has two types of customers: households (consumers) and CIOs of large corporations.

Eventually, the question was “Tell us in 5 words, what is it that HP is.” Meg starting saying that (again paraphrasing) “HP is the largest hardware and software company that can solve all your needs as a consumer or as a corp…”

“That’s more than 5 words!” the interviewer cut her off.

So, there you have it. Meg admitted that HP is not very clear on what their objectives are. Unless the objective is to be everything for everybody. But we know that hasn’t worked well in business before…

[SK in CV]

[quote=Diego Mamani]Our friend Meg was interviewed by Marketplace (NPR) yesterday. The interviewer asked some tough questions… Too bad I only listened towards the end.

The questions were along the lines of (paraphrasing) “what is it that HP does?” Or, “can you explain to a consumer, in a few, plain words, what HP is?”

Meg answered that HP has two types of customers: households (consumers) and CIOs of large corporations.

Eventually, the question was “Tell us in 5 words, what is it that HP is.” Meg starting saying that (again paraphrasing) “HP is the largest hardware and software company that can solve all your needs as a consumer or as a corp…”

“That’s more than 5 words!” the interviewer cut her off.

So, there you have it. Meg admitted that HP is not very clear on what their objectives are. Unless the objective is to be everything for everybody. But we know that hasn’t worked well in business before…[/quote]

That’s a bs question for any CEO. Even many small companies, much less large enterprise companies, are too complicated to be described in 5 or 10 word answers. At least half the DOW 30 CEO’s could not answer that question with a meaninful answer. Best she could have done is say “HP is a technology company”. Not very enlightening.

[Diego Mamani]

[quote=SK in CV]That’s a bs question for any CEO. Even many small companies, much less large enterprise companies, are too complicated to be described in 5 or 10 word answers. At least half the DOW 30 CEO’s could not answer that question with a meaninful answer. Best she could have done is say “HP is a technology company”. Not very enlightening.[/quote] I agree, but the NPR guy asked the “5 words” question only after Meg gave one evasive answer after another. She had plenty of time of give a 30- or 50-word answer, but she blew it again and again.

[no_such_reality]

[quote=SK in CV]That’s a bs question for any CEO. Even many small companies, much less large enterprise companies, are too complicated to be described in 5 or 10 word answers. At least half the DOW 30 CEO’s could not answer that question with a meaninful answer. Best she could have done is say “HP is a technology company”. Not very enlightening.[/quote]

“We’re the premier technology company”.

And no it’s not, but it’s simple. And from there you go into what do they mean. It’s the fact that they dance around with the BS.

The better part of this story is that they and the media is already starting to ask the question of why didn’t any of those 15 advisors on the autonomy deal raise a red flag?

[Coronita]

[quote=yooklid][quote=flu]
The problem with these dinosaur tech companies is that the stopped hiring innovative techies to run the company but instead hire a bunch of useless mba’s to try to squeeze a penny out of an already low margin business. HP lacks inovative people[/quote]

Perhaps they should promote Lynch (Autonomy) to the board? He’s impressive at the helm of his company the past 15+ years.[/quote]

Lol….. It gets better at HP….

Wow, I’m not even gonna touch this company’s stock at a $12 price….

http://finance.yahoo.com/news/insight-desperate-hp-suspended-disbelief-061905786.html

Insight: How a desperate HP suspended disbelief for Autonomy deal

By Poornima Gupta and Nadia Damouni and Paul Sandle
SAN FRANCISCO/NEW YORK/LONDON (Reuters) – For Leo Apotheker, the former Hewlett-Packard CEO, a July 2011 meeting with Autonomy founder Mike Lynch at a chic seaside resort in France was pivotal to his effort to remake a storied technology giant.
In the nine months since taking the helm at HP, Apotheker had tried furiously to find a way to move the lumbering company away from its low-margin computer hardware business and into the lucrative corporate software and services arena. Apotheker was looking for a big, transformative acquisition, two people familiar with the situation said, and after overtures to several companies went nowhere, he set his sights on Autonomy.
After two months of negotiations on what was known at HP as “Project Tesla,” Apotheker sat down with Lynch at a hotel in Deauville on the Normandy coast – and shook hands on what would become an $11.1 billion deal.
The Autonomy takeover was indeed a bombshell – but not in the way that Apotheker had hoped. When it was announced in August 2011, HP’s stock plummeted amid withering criticism of the price tag. Within weeks, Apotheker was out of a job. Within months, Lynch and his new masters at HP were at war.
Inside a year, Lynch had been forced out and HP was investigating allegations of major accounting irregularities at Autonomy. That culminated in HP saying last week it was writing off more than three-quarters of the value of Autonomy, and telling U.S. and UK regulators about alleged accounting fraud.
The implosion of the Autonomy deal has raised questions about how HP and its army of lawyers, accountants and investment bankers could have overlooked warning signs and gone ahead with the acquisition.
Reuters spoke with close to a dozen people directly connected with the deal or the accounting investigation. The picture that emerges is of a company so desperate to plot a new course that it may have been far too accepting of Autonomy’s published and audited accounts.
It has also cast a shadow over Lynch, widely regarded as a brilliant but difficult executive; he left HP in May and has flatly rejected the company’s claims of accounting shenanigans or that HP had been deliberately deceived.

CEO’S ROCKY REIGN
Apotheker’s appointment as CEO of HP in November 2010 was greeted even at the time with head-scratching – and criticism. A veteran of the German corporate software maker SAP, he had no obvious qualifications to run HP – a company with sales several times SAP’s – especially given his lack of experience in the computer hardware business.
But the U.S. company was reeling from a series of boardroom imbroglios that culminated in the firing of then-CEO Mark Hurd in a sexual harassment scandal in August 2010.
Apotheker went on the acquisition trail almost immediately, even though previous HP takeovers like Compaq and Palm had not worked out well. He was given the mandate of moving HP in a new direction – software seemed logical given the decline in HP’s traditional computer business – and felt the need for a transformative acquisition to do that, according to one of the sources.
He “knocked on a number of doors,” according to another of the sources, looking as far and wide as the telecom software companies Comverse Technology and Amdocs, and corporate software maker Tibco Software.
It’s not clear how far talks with those three progressed. According to one of the sources, HP backed off from Comverse because the company was not current with its published accounts and because of previously disclosed involvement in an options accounting scandal. HP could not agree on a price with Tibco, and Amdocs rebuffed it, saying the time wasn’t right for a deal.
Spokespeople for Amdocs and Comverse declined to comment. Tibco did not respond to requests for comment.
Apotheker then set his sights on Autonomy. It was a pioneer in the up-and-coming field of “big data” – software that can separate the wheat from the chaff in huge mountains of corporate data – and could serve as a centerpiece for the new strategy.
This time, Apotheker was determined not to miss out.
He was “not being able to really have anybody dance with him at the right price,” said the source with direct knowledge of the deal. “What happened is he talked to Autonomy and they got into a dialogue and he told the board that we have to do something,” this person said. “It was out of frustration and desperation to a large degree.”
HP began looking at Autonomy in earnest around May last year, bringing in investment bank Barclays as adviser. Boutique investment bank Perella Weinberg Partners had already been hired to look at ways of restructuring HP’s businesses.
In early July of 2011 the board met to do a two-day review of the rationale behind the acquisition. During that process, the board set guidelines for the deal, including the price, and agreed on a process to do due diligence, two people familiar with the process said. It voted to enter into negotiations at the end of the two days.
DEALMAKER
Throughout the process, Apotheker remained in direct contact and consulted with HP Chairman Ray Lane, the person said, adding that Lane – a former top executive at software giant Oracle – encouraged management to proceed with the deal.
By the end of July, Apotheker and Lynch – who were previously acquainted because HP was an Autonomy customer – narrowed down financial terms at the hotel in Deauville, though didn’t finalize the price.
Also present was then HP chief strategy officer Shane Robison, who has been credited by HP with being the main architect of many of HP’s larger deals, including another troubled acquisition – its purchase of technology services firm EDS. Robison was pushed out of HP shortly after Apotheker left last year.
At the meeting, Apotheker presented HP’s view about putting the companies together – with Robison chipping in when needed, one source said. Robison, who has not spoken publicly about Autonomy’s accounting issues, did not respond to requests for comment sent to representatives at Fusion-io and Altera Corp, companies where he is a board member.
For some weeks, both sides went back and forth on the price, with Robison playing a pivotal role in pitching the deal internally, and getting it finalized. Inside HP, it was seen as Apotheker’s and Robison’s deal, the sources said.
In the end, uber-dealmaker Frank Quattrone, whose Qatalyst Partners was representing Autonomy, proved instrumental in securing for its shareholders the lofty price tag, according to another source familiar with the negotiations.
While the price haggling was going on, a large due diligence team numbering in the hundreds, including internal HP staff from all relevant departments like finance, poured over Autonomy’s books, examined contracts, and interviewed Autonomy’s top executives, sources said. External experts involved in the process included accounting firm KPMG, law firms and bankers.
Due diligence was seen being straightforward as Autonomy had been filing its accounts publicly and they had been audited. One source said the month-long process was extensive and meticulous but nothing special.

SHORT SELLER
During this time, HP posed a litany of questions to Lynch and Autonomy Chief Financial Officer Sushovan Hussain about accounting rumors surrounding the company, one of the sources knowledgeable with the deal said. But Autonomy executives provided explanations for all of them, this person said.
HP would not elaborate on the specific issues it raised. But questions about Autonomy’s books had surfaced as early as 2009, when renowned short seller Jim Chanos identified Autonomy’s shares as a shorting opportunity based on concerns such as how reported margins of around 50 percent did not seem to translate proportionately into cash flow.
His other concern was how it could report double-digit growth in software license revenue while rivals battled shrinking sales, according to a source familiar with his views.
Asked on CNBC last week about whether the board had discussed with Apotheker the speculation about Autonomy’s books, HP’s current CEO Meg Whitman said: “Not when I was on the board. What I do know is that after we announced the acquisition there were a number of blogs that came to the fore about potential issues at Autonomy. The former management team ran that to ground and came up with the conclusion that there was nothing there.”
HP officials now say they were deceived.
Apotheker said last week he was “stunned and disappointed” to learn of Autonomy’s alleged accounting issues. He declined to be interviewed for this story through a spokesperson.
As the deal was being considered, HP CFO Cathie Lesjak did raise questions about HP’s ability to pay such a high price and whether it could integrate Autonomy well, sources said.
Lane said the board approved the deal based on the recommendation of management. “That recommendation was based on misleading audited financial statements and misrepresentations made by Autonomy’s executives,” he said in an email. “In hindsight, we shouldn’t have done the Autonomy deal at such a high price. We were lied to and as a result, we got it wrong.”
By the time the deal was agreed, though, Apotheker was already running out of time. He had wanted to sell HP’s personal computer business but was unable to complete a deal. He announced a strategic review of the division – to the horror of many employees and the consternation of some of its customers.
That misstep, along with series of missed financial targets, led to Apotheker’s firing in September 2011 – before the Autonomy deal had even closed. Board member Whitman – who had voted in favor of buying Autonomy – then took over as CEO. The acquisition still went ahead – and quickly went south.
BRUTAL CULTURE CLASH
The clash between HP’s polite, slow-moving bureaucracy and Autonomy’s in-your-face sales culture could not have been starker. Lynch also chafed at his new, subordinate position, according to the sources. He routinely shut HP management out of key decisions and – true to his company’s name – resisted full integration with HP. He complained constantly about red tape.
After he was forced out in May of this year, Lynch returned to HP in June to discuss severance. But he found himself on the receiving end of a barrage of questions about Autonomy’s accounting, sources briefed on the investigation told Reuters.
HP General Counsel John Schultz quizzed Lynch specifically on a range of accounting items, including at least three sales deals from a couple of years before, one of the sources said. Lynch’s reply to most questions was that Deloitte, its auditor, signed off on various items, or he could not remember specifics.
“If there were no problems, he could have explained it,” one of the sources said. “He simply refused to have the conversation.”
But Lynch was caught unaware: Hence he did not have information about those deals at hand, said a source familiar with his version of events. Lynch’s spokeswoman said that the allegations HP made last week “were not put to him in June.”
The legal struggle has only just begun. HP has handed documents over to the U.S. Securities and Exchange Commission and the UK Serious Fraud Office, and the U.S. Department of Justice is also involved, a source told Reuters last week.
HP also on Tuesday threatened legal action against parties involved, though stopped short of naming targets. HP has challenged Lynch to answer questions under penalty of perjury.
“He ran this company like a small private company, he was involved in all facets of the company, he was extremely hands on,” said a source close to the matter who knew the former Autonomy CEO. “For Lynch not to know about this, if it is truly happening, would be far-fetched.”

[Allan from Fallbrook]

FLU: Lynch, according to Larry Ellison, tried to sell Autonomy to Oracle, but they sent him packing, claiming that Autonomywas way overvalued.

I don’t remember the number that Lynch floated to Oracle, but I want to say it was $2B and Ellison said that was too high. Lynch is vehemently denying that this ever took place, Ellison has been releasing notes, along with the Autonomy slide deck presented.

All of which begs the obvious questions. First, how in the hell did HP get to an $11B valuation number, and, second, how did that insane number survive due diligence?

Perhaps SK, the resident CPA, can answer that because I have no clue.

[SK in CV]

[quote=Allan from Fallbrook]FLU: Lynch, according to Larry Ellison, tried to sell Autonomy to Oracle, but they sent him packing, claiming that Autonomywas way overvalued.

I don’t remember the number that Lynch floated to Oracle, but I want to say it was $2B and Ellison said that was too high. Lynch is vehemently denying that this ever took place, Ellison has been releasing notes, along with the Autonomy slide deck presented.

All of which begs the obvious questions. First, how in the hell did HP get to an $11B valuation number, and, second, how did that insane number survive due diligence?

Perhaps SK, the resident CPA, can answer that because I have no clue.[/quote]

Beats the f outta me. I don’t know if I ever knew that Apotheker was an SAP guy. If I did, I’d certainly forgot it. It kind of sounds to me like he was envisioning some sort of magical synergy between Autonomy and HP that would help redirect and rebrand HP into a space where they’d never been. And if it worked, the price paid would almost be incidental. That synergy never developed. I have slightly better than a laymans understanding of the space Apotheker and the other HP guy that came from Oracle had their backgrounds in. (I spent some time working in that industry.) But I don’t know enough about Autonomy’s product to know whether that synergy was ever realistic. Acknowledging my lack of qualifications, I have my doubts.

When that wishful thinking synergy never developed, blame the numbers. They didn’t write down the acquisition costs by 10 or 20%. They’re claiming now that its worth only 25% of what they paid, down near the price Ellison was discussing. I think it has nothing to do with bad accounting.

I find it almost bizarre that Ellison is saying anything. The NDA’s on these kinds of negotiations are usually pretty damn tight. If he really is sharing presentations, he’s gonna get his ass sued.

[Coronita]

[quote=SK in CV][quote=Allan from Fallbrook]FLU: Lynch, according to Larry Ellison, tried to sell Autonomy to Oracle, but they sent him packing, claiming that Autonomywas way overvalued.

I don’t remember the number that Lynch floated to Oracle, but I want to say it was $2B and Ellison said that was too high. Lynch is vehemently denying that this ever took place, Ellison has been releasing notes, along with the Autonomy slide deck presented.

All of which begs the obvious questions. First, how in the hell did HP get to an $11B valuation number, and, second, how did that insane number survive due diligence?

Perhaps SK, the resident CPA, can answer that because I have no clue.[/quote]

Beats the f outta me. I don’t know if I ever knew that Apotheker was an SAP guy. If I did, I’d certainly forgot it. It kind of sounds to me like he was envisioning some sort of magical synergy between Autonomy and HP that would help redirect and rebrand HP into a space where they’d never been. And if it worked, the price paid would almost be incidental. That synergy never developed. I have slightly better than a laymans understanding of the space Apotheker and the other HP guy that came from Oracle had their backgrounds in. (I spent some time working in that industry.) But I don’t know enough about Autonomy’s product to know whether that synergy was ever realistic. Acknowledging my lack of qualifications, I have my doubts.

When that wishful thinking synergy never developed, blame the numbers. They didn’t write down the acquisition costs by 10 or 20%. They’re claiming now that its worth only 25% of what they paid, down near the price Ellison was discussing. I think it has nothing to do with bad accounting.

I find it almost bizarre that Ellison is saying anything. The NDA’s on these kinds of negotiations are usually pretty damn tight. If he really is sharing presentations, he’s gonna get his ass sued.[/quote]

Ellison doesn’t strike me as someone that cares…Afterall, he was the one that was going well over 100mph with the copper following him all the way to his office in Redwood City…And then as he was getting out he told the cop “I called my lawyer, you talk to him” and went into his office…

Or the guy that will be sailing his yacht while the rest of the company is doing oracleworld….

Or the guy that will land his private plan in SJC afterhours and not give a hoot.

Or the guy that made the statement that the difference between God and Me is that God doesn’t run Oracle.

And with Hurd at his company, I think HP is just Ellison’s sidekick….

I find the irony that HP was trying to get into enterprise software and consulting..They sucked at it…When I was at a leading EAI/B2B company, they approached us because they claimed they had a “breakthrough technology”…. It was called e-Speak..And oh my, those guys talked like they invented the internet…

And yes, SAP software sucks donkey….

Allan, considering that HP also bought EDS and worse so Compaq, it’s pretty evident they don’t know what they’re buying….

Maybe I can try to sell a bridge to HP….

But speaking from experience, enterprise software can be a very dirty business. I use to work at a startup and there were a lot of tricks being played about being a “strategic partner” and “revenue”… Let’s just say it was enough vaporware and smoke and mirrors for the company to get sold to Iona, that subsequently was sold for 1/2 of what Iona paid for the company..Go figure…

[SK in CV]

[quote=flu]

And yes, SAP software sucks donkey….

[/quote]

I gotta disagree here. Neither SAP nor Oracle suck. They both make incredibly powerful enterprise tools. Some installations suck because those designing and implementing it suck. Sometimes. There are thousands of installations around the world that provide exactly what they’re designed to do.

But yeah, it’s a dirty business. Both on the sales side and the implementation side where I worked. As is any industry where single sales can involve tens of millions of dollars, and consulting costs related to implementation can easily be double that.

[Author]

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