|By Maureen O'Gara||
|November 23, 2012 10:00 AM EST||
When Hewlett-Packard CEO Meg Whitman stunned practically everyone within earshot early Tuesday morning by accusing the company's year-old Autonomy acquisition of ripping off HP with phony financials, she said that after she bounced Autonomy's founder out of HP in late April a senior member of Autonomy's staff owned up to the fraud.
She didn't identify the informant, giving Autonomy founder Mike Lynch the opportunity to tell the press that he couldn't possibly imagine who she meant since he was the last senior manager to leave after HP ran everybody else off.
Apparently he didn't count noses all that well.
An informed source says the left-behind informant - and there may have actually been two - told HP that the bogeys Lynch set couldn't be met because they were based on a fiction.
Lynch himself was reportedly fired for missing his forecast by 20%, a sin Meg found insupportable. She supposedly dumped him to set an example. He blamed HP and its rules for it after he heroically tried to keep Autonomy away from HP's bureaucracy because its culture was "special," a device that worked with Meg initially.
Lynch, who categorically denies HP's allegations, told the press late Tuesday that he was "ambushed" by HP's charges, and had no details because he wasn't informed beforehand or contacted by any lawyers or regulators. All he knew was what was in the HP press release and didn't know what Whitman was talking about but was sure it could all be explained.
He ducked behind Deloitte, which he said audited Autonomy's results quarterly, and claimed his books were in line with international accounting standards, which, he said, may be different from US rules.
However, HP's investigators apparently questioned Lynch and the old Autonomy management team in July and found their answers vague and "unhelpful" so he must have known something,
Still Lynch claimed that HP had had hundreds of its people and three auditors doing due diligence before the acquisition closed and said they couldn't have missed an "elephant in the room" as big as HP alleges.
Ex-HP CEO Mark Hurd apparently spied the elephant right off when Autonomy tried to shop itself to Oracle, where Hurd was co-president. Sources say the roll-up was asking $4 billion-$6 billion and Hurd figured it was worth maybe $1.5 billion. Lynch denied trying to sell Autonomy to Oracle but Oracle put his presentation on its web site.
Rejected, Autonomy and the Frank Quattrone Qatalyst crew then breezed by HP - which had already bought 3PAR from Quattrone for a ludicrous $2.35 billion, a 200% premium. They talked to CTO Shane Robison, who convinced then-CEO Leo Apotheker it was worth spending over $12 billion including debt to buy. A year later HP is writing off an amazing $8.8 billion on the adventure.
Lynch blames the "internecine" politics inside HP, its rejection of Apotheker and Robinson's strategy of dumping PCs and focusing on software, and the "coup d'état" that unseated them for his current problem.
With them gone because of the wildly unpopular Autonomy acquisition and with Whitman in charge, he claims HP mismanaged the acquisition, imposing 30% mark-ups on Autonomy software, running off established accounts, and not paying commissions on Autonomy sales but instead paying its salesmen for the competitive software they sold.
He figures Autonomy's prospects deteriorated and that's why HP took the massive write-off - to cover up its mismanagement.
He forgets Autonomy's reputation, at least in England, in the years before HP entered the picture, when it was a public company and the press and analysts were suspicious of its numbers and its vapor-y Bayesian unstructured data IDOL search technology or Intelligent Data Operating Layer, citing pretty much the same kind of "not-as-good-as-it-looks" objections HP is now complaining about.
Forrester Research says Autonomy "didn't invest in R&D; they didn't have regular software releases; they weren't transparent with a roadmap of where they were going; they didn't seek customer feedback. Customers complained, but the promise of managing all their information and making better decisions was so attractive. They bought more."
Lynch must also be aware of the rumors that have circulated about Autonomy since the HP takeover and spreading tales of users throwing out the over-hyped software or getting it for nothing, which may explain why its sales plummeted.
Forbes captures best what reporters have been up against for the last year as reports on hard-to-prove shenanigans were dangled in front of them.
It said, "Here's what my source observed personally":
"Autonomy grew through acquisitions, buying everything from storage companies like Iron Mountain to enterprise software firms like Interwoven. They'd then go to customers and offer them a deal they couldn't refuse. Say a customer had $5 million and four years left on a data-storage contract, or ‘disk,' in the trade. Autonomy would offer them, say, the same amount of storage for $4 million but structure it as a $3 million purchase of IDOL software, paid for up front, and $1 million worth of disk. The software sales dropped to the bottom line and burnished Autonomy's reputation for being a fast-growing, cutting-edge software company a la Oracle, while the revenue actually came from the low-margin, commodity storage business.
"They would basically give them software for free but shift the costs around to make it look like they got $3 million in software sales," the Forbes source, who directly observed such deals, said.
"Lynch's management team was also practiced at the art of wringing attractive-looking growth out of a string of ho-hum acquisitions. The typical strategy was to bolt IDOL and other software onto a company's existing products and try and convince customers to pay more for the ‘new' products. If that failed, they'd milk the existing customer base by halting development and outsourcing support," its source said, "using the cash from the runoff business to fund more acquisitions."
"Mike Lynch was famous for saying Autonomy never put an end-of-life on any product. But the customers were screaming."
In sales meetings, Lynch reportedly "loved to do vague and theoretical academic-type presentations to show what a visionary he was." And the product "looked like a lot of vaporware wrapped up in fancy Cambridge talk and the kind of accounting tricks managers have engaged in since the dawn of publicly traded stock."
HP's admission of being snookered means its CEO and its board, which voted for the acquisition, have put their heads on the chopping block given HP's history of incompetent management.
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
May. 28, 2015 11:15 PM EDT Reads: 2,809
The recent trends like cloud computing, social, mobile and Internet of Things are forcing enterprises to modernize in order to compete in the competitive globalized markets. However, enterprises are approaching newer technologies with a more silo-ed way, gaining only sub optimal benefits. The Modern Enterprise model is presented as a newer way to think of enterprise IT, which takes a more holistic approach to embracing modern technologies.
May. 28, 2015 11:00 PM EDT Reads: 6,433
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impact.
May. 28, 2015 09:00 PM EDT Reads: 5,472
There's no doubt that the Internet of Things is driving the next wave of innovation. Google has spent billions over the past few months vacuuming up companies that specialize in smart appliances and machine learning. Already, Philips light bulbs, Audi automobiles, and Samsung washers and dryers can communicate with and be controlled from mobile devices. To take advantage of the opportunities the Internet of Things brings to your business, you'll want to start preparing now.
May. 28, 2015 07:00 PM EDT Reads: 6,178
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect at Hookflash, will walk through the shifting landscape of traditional telephone and voice services ...
May. 28, 2015 03:00 PM EDT Reads: 4,751
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
May. 28, 2015 02:00 PM EDT Reads: 5,316
The world is at a tipping point where the technology, the device and global adoption are converging to such a point that we will see an explosion of a world where smartphone devices not only allow us to talk to each other, but allow for communication between everything – serving as a central hub from which we control our world – MediaTek is at the heart of both driving this and allowing the markets to drive this reality forward themselves. The next wave of consumer gadgets is here – smart, connected, and small. If your ambitions are big, so are ours. In his session at @ThingsExpo, Jack Hu, D...
May. 28, 2015 02:00 PM EDT Reads: 1,116
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
May. 28, 2015 01:00 PM EDT Reads: 6,674
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, June 9-11, 2015, at the Javits Center in New York City. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be
May. 28, 2015 12:15 PM EDT Reads: 2,998
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
May. 28, 2015 12:00 PM EDT Reads: 2,379
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
May. 28, 2015 12:00 PM EDT Reads: 2,579
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York City, NY. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurring their adoption by amplifying "faint signals" from the alpha geeks who are creating the future. An active participa...
May. 28, 2015 11:30 AM EDT Reads: 1,185
We’re entering a new era of computing technology that many are calling the Internet of Things (IoT). Machine to machine, machine to infrastructure, machine to environment, the Internet of Everything, the Internet of Intelligent Things, intelligent systems – call it what you want, but it’s happening, and its potential is huge. IoT is comprised of smart machines interacting and communicating with other machines, objects, environments and infrastructures. As a result, huge volumes of data are being generated, and that data is being processed into useful actions that can “command and control” thi...
May. 28, 2015 11:15 AM EDT Reads: 1,048
There will be 150 billion connected devices by 2020. New digital businesses have already disrupted value chains across every industry. APIs are at the center of the digital business. You need to understand what assets you have that can be exposed digitally, what their digital value chain is, and how to create an effective business model around that value chain to compete in this economy. No enterprise can be complacent and not engage in the digital economy. Learn how to be the disruptor and not the disruptee.
May. 28, 2015 11:08 AM EDT Reads: 867
There's Big Data, then there's really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at Big Data Expo®, Hannah Smalltree, Director at Treasure Data, discussed how IoT, Big Data and deployments are processing massive data volumes from wearables, utilities and other machines...
May. 28, 2015 10:00 AM EDT Reads: 4,619
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists will peel away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud environment, and we must architect and code accordingly. At the very least, you'll have no problem fil...
May. 28, 2015 10:00 AM EDT Reads: 2,360
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
May. 28, 2015 09:00 AM EDT Reads: 3,213
The worldwide cellular network will be the backbone of the future IoT, and the telecom industry is clamoring to get on board as more than just a data pipe. In his session at @ThingsExpo, Evan McGee, CTO of Ring Plus, Inc., discussed what service operators can offer that would benefit IoT entrepreneurs, inventors, and consumers. Evan McGee is the CTO of RingPlus, a leading innovative U.S. MVNO and wireless enabler. His focus is on combining web technologies with traditional telecom to create a new breed of unified communication that is easily accessible to the general consumer. With over a de...
May. 28, 2015 06:00 AM EDT Reads: 5,083
Disruptive macro trends in technology are impacting and dramatically changing the "art of the possible" relative to supply chain management practices through the innovative use of IoT, cloud, machine learning and Big Data to enable connected ecosystems of engagement. Enterprise informatics can now move beyond point solutions that merely monitor the past and implement integrated enterprise fabrics that enable end-to-end supply chain visibility to improve customer service delivery and optimize supplier management. Learn about enterprise architecture strategies for designing connected systems tha...
May. 28, 2015 05:00 AM EDT Reads: 6,298
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, a...
May. 28, 2015 04:00 AM EDT Reads: 6,777