1. From They would.P., a Blunder That Seems to get over All
in 2000, a deal that came to define the folly of the Internet bubble. It ruined shareholder value,
finished careers and almost capsized the surviving AOL Time Warner. Enlarge This Image
Ryan Anson/Bloomberg News Site , via Getty Pictures
Leo Apotheker, chief executive of Hewlett Packard, with Catherine A. Lesjak, its chief financial
officer, at a gathering in March 2011. Ms. Lesjak strongly opposed the acquisition of Autonomy.
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" The deal was considered so terrible, and this kind of object lesson for a generation of deal
makers and corporate executives, that it seemed likely not to be duplicated, rivaled or surpassed.
So far.
Hewlett-Packard's acquisition a year ago of the British computer software manufacturer
Autonomy for $11.1 billion "may be worse than Time Warner," Toni Sacconaghi, the respected
2. technology analyst at Sanford C. Bernstein, told me, a view which was echoed this week by a
few H.P. analysts, opponents and disgruntled investors.
And it credited significantly more than $5 billion of the write-off to what it called a "willful
effort on behalf of certain former Autonomy employees to inflate the underlying monetary
metrics of the company in order to mislead investors and potential buyers," adding, "These
misrepresentations and deficiency of revealing severely affected H.P. management's ability to
fairly value Autonomy during the time of the offer."
In a very competitive public relations counter-attack, Autonomy's founder, Michael Lynch, a
Cambridge-educated Ph.D., has denied the charges and accused Hewlett Packard of
mismanaging the acquisition. H.P. asked Mr. Lynch to step aside last May after Autonomy's
results fell way short of expectations.
But others say the problem of fraud, although it might offer a face saving justification for at least
some of H.P.'s enormous write-down, shouldn't obscure the reality that the deal was extremely
overpriced from the outset, that at least some folks at HewlettPackard recognized that, and that
H.P.'s chairman, Ray Lane, as well as the board that approved the deal ought to be held
accountable.
A Hewlett Packard spokesman said in a statement: It goes without saying that they're
disappointed that a lot of the information they relied upon appears to have been controlled or
inaccurate."
But, the enormous write-down as well as the disappointing results at Autonomy, combined with
other missteps, have led to the widespread understanding that H.P., once one of the state's most
respected companies, has lost its way.
