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Meg Whitman Says HP Was Defrauded By Autonomy; HP Stock Plunges

timothy posted about 2 years ago | from the damn-english-ravines dept.

HP 237

McGruber writes "CNBC is reporting that Meg Whitman claims HP was defrauded in its purchase of Autonomy. 'We believed there is a willful effort on the part of certain members of Autonomy management to mislead shareholders when Autonomy was a publicly traded company, and to mislead potential buyers including HP,' Whitman said. 'We stand by the forensic review that we've seen,' she added. I wish her the same level of success I had when I filed an eBay claim." Also covered at SlashBI, which names the write-down damage: $8.8 billion.

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Meg, Carly (5, Insightful)

tekrat (242117) | about 2 years ago | (#42043413)

This is a love letter...

Please don't run any other companies into the groud. Please stop whatever you're doing and go home, and avoid public life as a CEO, or politician. You've both proven you don't know jack.
The world would be better off without either of you.

The rest of the planet.

Re:Meg, Carly (5, Informative)

shawn(at)fsu (447153) | about 2 years ago | (#42043445)

She wasn't the CEO of HP when the acquisition happend this one isn't her fault.

Re:Meg, Carly (1)

Anne_Nonymous (313852) | about 2 years ago | (#42043487)

Which do we hate more, Ebay/Paypal or HP?

Personally, I pick Ebay/Paypal, since there are fewer viable alternatives to their products.

Re:Meg, Carly (5, Funny)

localman57 (1340533) | about 2 years ago | (#42043553)

Yes, but you can use eBay to buy knock off toner cartridges, thereby denying HP of revenue.

Re:Meg, Carly (0)

Anonymous Coward | about 2 years ago | (#42043697)

Yes, but HP was once a really great company with terrific products, and thus their fall to the current lowly state is all the more shameful. Ebay has always been a big bag of suck.

Re:Meg, Carly (1)

MickyTheIdiot (1032226) | about 2 years ago | (#42043879)

And your argument RETURNS to Carly Fiorina.

Re:Meg, Carly (5, Funny)

Jeremiah Cornelius (137) | about 2 years ago | (#42044329)

Look at the picture on CNBC.

I'm pretty certain, based on this evidence, that Meg Whitman is Steve Ballmer in drag.

Re:Meg, Carly (1)

Anonymous Coward | about 2 years ago | (#42043751)

We may be happy that Paypal has paved the way for international payments unlike anything ever seen, where people can pay anyone in the world simply by knowing an email address (compared with the old dozen piece of data to pay someone in a developing country using a nominee bank, taking a week plus), and we may not share your hatred.

Re:Meg, Carly (3, Informative)

YodasEvilTwin (2014446) | about 2 years ago | (#42043809)

PayPal will take every opportunity to steal your money.

Re:Meg, Carly (1)

Urkki (668283) | about 2 years ago | (#42044323)

PayPal will take every opportunity to steal your money.

And this is different from other financial institutions... how?

Re:Meg, Carly (4, Insightful)

jeffmeden (135043) | about 2 years ago | (#42044365)

PayPal will take every opportunity to steal your money.

And this is different from other financial institutions... how?

The difference is that "other financial institutions" are regulated as such, and there are fairly significant consequences to stealing money (of course that doesn't mean it won't happen). The process of regulating banks through several boom, exploit, bust cycles has taught the regulators a LOT about what to watch out for. Paypal, on the other hand, just steals indiscriminately and has no regulation at all to answer to. Oh yeah, and they are the "de facto currency" of many businesses, meaning that to participate in the free market it is very difficult to avoid PayPal.

Re:Meg, Carly (2, Insightful)

Anonymous Coward | about 2 years ago | (#42044799)

I have used PayPal as the payment processor on my website for years. I run an honest service, I resolve any purchase disputes quickly. I am as ethical in my transactions as I know how to be. I have never, ever, had any problem with PayPal, or access to my money. In fact, they recently upgraded my account standing with them so that in the event of any customer dispute, funds in my account are no longer held by them, because I have demonstrated that I am a trustworthy user of their services. Zero problems with PayPal.

Just saying... sometimes the problem isn't with them... sometimes it's a problem with what people try to get away with when using their services.

Re:Meg, Carly (1)

aliquis (678370) | about 2 years ago | (#42044183)

I don't even know why I should hate HP. Except their printer dominance maybe?

Ebay is shit and I can't pick whatever language I want on all the web sites and it got no Swedish version (so if I visit .com, .de or .fr why can't I have them all served in English? Really?)

Also all the theft done by Paypal over the years. Though I'm unlikely to have that happen to myself.

Re:Meg, Carly (0)

Anonymous Coward | about 2 years ago | (#42043541)

I think he referring to the criticisms that Carly laid the foundation from which this blunder was built. She's been blamed for laying off all the HP management that would have known better and installed the idiots that serve on the board that keep hiring people like Hurd, Lesjak, Apotheker, and now Whitman.

Re:Meg, Carly (5, Informative)

localman57 (1340533) | about 2 years ago | (#42043585)

She wasn't the CEO of HP when the acquisition happend this one isn't her fault.

It's at least partially her fault. Per the FA:

In an interview with CNBC, Whitman said she regretted voting to approve the deal with Autonomy,

Re:Meg, Carly (1)

phantomfive (622387) | about 2 years ago | (#42044221)

I don't doubt that Autonomy willfully deceived HP, trying to make their company look better than it was. That's just what startups do, and it's why buyers need due diligence.

However, if there are no lawsuits and no one goes to jail for fraud, then Occam's razor suggests the fault for a bad purchase goes to HP.

Re:Meg, Carly (1)

crgrace (220738) | about 2 years ago | (#42043771)

True, but if you read the article you'd see that the Autonomy writedown is only a portion of the loss.

Re:Meg, Carly (3, Funny)

whoever57 (658626) | about 2 years ago | (#42043995)

True, but if you read the article you'd see that the Autonomy writedown is only a portion of the loss.

Actually, you have that back-to-front. The loss was $6.9B while the writedown was $8.8B, so without the writedown, HP would have reported a profit!

Re:Meg, Carly (-1, Troll)

localman57 (1340533) | about 2 years ago | (#42044383)

True, but if you read the article you'd see that the Autonomy writedown is only a portion of the loss.

Actually, you have that back-to-front. The loss was $6.9B while the writedown was $8.8B, so without the writedown, HP would have reported a profit!

Ah, yes. I've heard of this before. Math that Republicans do to make themselves feel better, Right?

Re:Meg, Carly (1)

BitZtream (692029) | about 2 years ago | (#42044443)

What? Are you retarded? The math is valid. HP fucked up purchasing Autonomy otherwise they would have turned a profit. Assuming they aren't going to go bankrupt because of it, that means HP remains a perfectly viable company and makes the stock sale off an example of ignorance. Political party has nothing to do with facts.

Re:Meg, Carly (1)

localman57 (1340533) | about 2 years ago | (#42044709)

The joke just seemed like a good fit given her previous job, and the fact that we're using math based on shit that didn't happen. If all my jokes were funny, I'd go be a writer...

The Autonomy thing wouldn't be such a big deal, except it's starting to look like a pattern. First the Palm thing, then this. Both were very public debacles. Granted, HP has been on a buying spree for a decade [wikipedia.org] , most of which gets little press, and the Palm aquisition was almost pocket changes, but it generated a lot of bad press. At some point it starts to affect your stock price if you look like a bunch of chimps. That hurts your company valuation, which hurts your whole business in a lot of little ways.

127% is a large portion (2)

DragonWriter (970822) | about 2 years ago | (#42044239)

True, but if you read the article you'd see that the Autonomy writedown is only a portion of the loss.

The $8.8 billion Autonomy write-down is "only" about 127% of the $6.9 billion quarterly loss.

Re:Meg, Carly (0)

Anonymous Coward | about 2 years ago | (#42043819)

Guess who was on the board.

Re:Meg, Carly (4, Informative)

ShanghaiBill (739463) | about 2 years ago | (#42043957)

She wasn't the CEO of HP when the acquisition happend this one isn't her fault.

Nor has she "run any other companies into the ground". Ebay's revenues increased by 200000% while she was CEO. Meg Whitman is not Carly Fiorina. Unlike Carly, Meg has a solid track record as a successful CEO.

Re:Meg, Carly (1)

misexistentialist (1537887) | about 2 years ago | (#42044511)

freecreditreport.com has great numbers too. Doesn't mean it's not a shit operation.

Re:Meg, Carly (5, Insightful)

Ryanrule (1657199) | about 2 years ago | (#42044675)

A dead parrot could have run ebay just as well. They were alone in a huge growth market.

Re:Meg, Carly (2, Interesting)

mcrbids (148650) | about 2 years ago | (#42044765)

Two words: Skype purchase.

When Meg took over as CEO, the company was already headed skyward, already had upward momentum. Mostly she just had to not screw up too badly to make it successful. EBay was actually rather late to implement such features as "Buy it now" which were already innovated in competing marketplaces that didn't have the same mind share. (I should'a patented that one, oh well)

Ebay's purchase of Skype was the most random purchase ever, it was for a quajillion dollars (Ebay lost virtually all of it) and they didn't even buy the source code.

Oh, and don't forget Meg Whitman 2010! [cnet.com] Spent crazy amounts of money on ads that were not effective during a time when the political climate almost could not be better.

Re:Meg, Carly (1)

alexander_686 (957440) | about 2 years ago | (#42044205)

But she was on the board and did vote in favor. So, the primary fault should be assigned to the old CEO, but she has to take some of the blame.

Re:Meg, Carly (0)

Anonymous Coward | about 2 years ago | (#42044771)

B.S.!!!!!!! She voted for the acquisition......

Re:Meg, Carly (0, Funny)

Anonymous Coward | about 2 years ago | (#42043533)

I would like to recommend Carly for the CEO of AT&T.

Re:Meg, Carly (1)

AwesomeMcgee (2437070) | about 2 years ago | (#42043967)

This is actually a FANTASTIC idea. If you like the idea of a verizon monopoly. As of *yet* AT&T hasn't willfully sent me outright fraudulent bills, which verizon has, so how about Carly for CEO of Verizon? Oh better yet, Meg for CEO of AT&T and Carly for CEO of Verizon! I love it!

Re:Meg, Carly (1)

AttillaTheNun (618721) | about 2 years ago | (#42043769)

Dear HP,

Why don't you just print yourself some more money, or have you run out of toner?

Re:Meg, Carly (5, Funny)

jandrese (485) | about 2 years ago | (#42043859)

It's HP, printing money would end up costing you more in ink than the counterfeit bills would be worth.

Re:Meg, Carly (0)

Anonymous Coward | about 2 years ago | (#42043831)

Re:Meg, Carly (-1)

Anonymous Coward | about 2 years ago | (#42044227)

This is a pretty sexist post.

1) What do Meg Whitman and Carly Fiorina have to do with each other, other than that they were both female CEO's of HP? HP has had several male CEOs during the past 15 years, and not a great track record among them either.

2) Leo Apotheker was at the helm when the Autonomy deal was struck. Why don't you post about him? Maybe because it doesn't fit well with the axe you happen to be grinding.

Re:Meg, Carly (0, Troll)

slashmydots (2189826) | about 2 years ago | (#42044617)

I don't think you're going to stop women from buying things on emotion and then regretting it later when they actually look into the technical details, lol. That's been going on for centuries.

Red herring (5, Insightful)

Runesabre (732910) | about 2 years ago | (#42043451)

I find it hard to believe that the management of HP failed to uncover fraud of this magnitude during their evaluation in the purchase of Autonomy. What this really means is management failed to do their due diligence in evaluating Autonomy and now need to to distract from poor financial performance due to a lack of competence at the executive level.

Re:Red herring (0)

Anonymous Coward | about 2 years ago | (#42043561)

To be fair, they can only make an assessment based upon what they are told by the company itself.

It turns out the company was lying or embellishing itself, and HP didn't glance down Autonomy's pants to verify what was being said, and now they're sad because Autonomy has a tiddler.

Re:Red herring (1)

Scutter (18425) | about 2 years ago | (#42043737)

Bullshit. For almost 12 billion dollars, you should have an army of accountants and lawyers going over every book with a fine-toothed comb. The whole point of due diligence is that YOU DON'T TAKE THE WORD OF THE COMPANY YOU'RE BUYING.

Re:Red herring (1)

shentino (1139071) | about 2 years ago | (#42043783)

And yet that magically makes it ok for Autonomy to lie through its teeth?

It's a good idea to lock your doors, but failing to do so doesn't automatically make it ok for a burglar to rob you.

I'm tired of "due diligence" being used as a blank cheque for companies to lie.

Re:Red herring (0)

Anonymous Coward | about 2 years ago | (#42043861)

Well, it's like this. If the company takes a hit to the bottom line, it doesn't just affect them. It affects share holders, stock prices, employees, etc. A company has a duty to be truthful and as clear as possible when selling their company, but the buying company has a duty to all the people under it to not screw them over on their jobs/investments. So whenever something like this happens, the greater screw up came from whoever failed to meet the challenge of due diligence. If this weren't the case, every CEO would be setting up shell companies and buying them for millions and millions, then retiring with that money while claiming foul play.

Re:Red herring (4, Insightful)

AwesomeMcgee (2437070) | about 2 years ago | (#42044029)

Actually it's their fiduciary responsibility to their shareholders to do their due diligence. They just lost a ton of *other* peoples money due to negligence.

To fulfill your obligatory car analogy: It's like you not locking someone elses car doors and the thing getting stolen. Yes, you *are* responsible to that person now as you acted with negligence, this doesn't disavow the thief but responsibility to the car's owner is squarely on you not the thief.

Re:Red herring (3)

MarkvW (1037596) | about 2 years ago | (#42044065)

It's a "two-fer."

Fraudsters should fry, civilly and criminally for their deceptive conduct.
Corporate execs who blow money without due diligence should be out of a job.

Re:Red herring (1)

BitZtream (692029) | about 2 years ago | (#42044487)

No, it means both HP and Autonomy are fully guilty of causing the same problem. You don't split the punishment half and half, you double it, full for each side.

Re:Red herring (3, Informative)

dave562 (969951) | about 2 years ago | (#42044811)

Due diligence is a blank cheque for companies to lie. The due diligence, if done ... diligently... is supposed to catch these things. There is a whole discipline in the business world that focuses on these transactions.

Here is just one example of how common due diligence is...

http://www.steptoe.com/assets/htmldocuments/Jeffrey%20Weiner%20Chapter%20Business%20Due%20Diligence%20Strategies%202010.pdf [steptoe.com]

If the executives were doing their job, they would be assuming that whomever they are trying to acquire is going to lie to them and is going to do everything that they can to inflate the value of their company. The more I deal with lawyers, the more I realize that the laws are there because everyone is trying to screw everyone else. If someone is a CEO and has not realized that yet, they need to be fired. The corporate world is an evil, predatory place where con artists are paid big money to deceive, lie, cheat and steal to get ahead.

Every single major consulting firm (Deloitte, KPMG, etc) all have extensive M&A practices. Presumably whomever HP engaged to handle the M&A work dropped the ball in a major way.

This is the kind of thing that is likely going to result in a shareholder lawsuit. This is just the first inning. HP is doing what they can to get out ahead of the problem. I would not be surprised if they end up going after their auditors, or whoever they hired to do the M&A. If their own internal legal team handled it, they are screwed.

Re:Red herring (5, Insightful)

garyebickford (222422) | about 2 years ago | (#42044283)

Good luck with that. There are numerous cases in recent history where large companies have managed to hide their problems prior to a merger, or prior to going completely bust. It can be very, very difficult to figure out the details of how big complex companies are put together - even for the company's own accountants. It can be analogized to the halting problem, or the shortest route problem. A big company's internal transactions constitute a huge dependency graph with an almost unlimited opportunity for cycles within the graph, and then there are all the external transactions - which ones are truly 'external'?

For example, a company like Best Buy may have over one thousand subsidiaries, nested three to four levels deep, in over 100 countries. None of those countries require the level of accounting rigor of the US, especially since Sarbanes-Oxley (the so-called 'Enron law' - case in point). Now try to analyze millions of transactions large and small between the various subsidiaries and to/from outside entities, and determine which of those transactions is part of a complex money laundering process, and which ones are part of some accountant's method for skimming money off the top. In fact, with a company that big and complex, the odds are that several of the accountants or executives in smaller subsidiaries are, in fact, skimming - perhaps by 'selling' goods to a dummy company that never happens to pay its bills. Now separate those actions from some larger process that the parent company has set up to avoid visibility of losses.

It can happen by accident as well, without any intent to do evil. I know of a at least one IPO that was cancelled when a company doing the required due diligence before going public discovered to their dismay that while they thought they were going gangbusters, they were in fact insolvent (hint: growth is expensive). So instead of IPO, bankruptcy followed.

There are zillions of other ways to use 'creative' accounting methods to hide problems - companies often don't know until it's too late. It's a mistake to consider a large corporation as a monolithic entity. One group of large companies that I work with literally don't know who their customers are - they are the product of dozens of mergers over decades, and have never integrated the accounting systems together - I won't go into why that is but there are good reasons, which are related to risk, cost and disruption.

tl;dr: the complexity of companies can be arbitrarily large; finding problems may be impossible with the limited data available prior to merger.

Re:Red herring (1)

tonywong (96839) | about 2 years ago | (#42044449)

+1 to your post.

Re:Red herring (5, Insightful)

Anonymous Coward | about 2 years ago | (#42043723)

I think it's clear that the HP management needs a massive pay rise while everyone else in HP needs to take a pay cut and work longer hours to cover this loss!

Re:Red herring (0)

Anonymous Coward | about 2 years ago | (#42043747)

The target company in an acquisition is responsible for making these disclosures. The board only had a fiduciary duty to investigate further if there were red flags warning them of fraud.

Re:Red herring (2)

fermion (181285) | about 2 years ago | (#42043843)

Management wants the common person to believe they are supreme deities so they can justify the huge compensation, but in reality they are just people who are usually overpaid. Being overpaid is not a big thing, it is what most of us aspire to, but being not especially competent is.

Some sales are made because current owners or management does not have the ability to deal with current situation or take advantage of current opportunities, but I think most purchases are like buying a used car, it is being sold because there is something wrong with it. We have too many cases where lately where these unreliable firms have been sold for huge amounts, showing that the sellers had an ability to bullshit, or bribe, that exceeded the larger corporation intelligence ability.

So no, it never surprises me when due diligence fails. What surprises me is when the purchasing firm cannot take responsibility for their failure. After all, if we failed to choose the right printer, and maintain it properly, HP would not give us a new one, even if we went to court.

Re:Red herring (2)

Kergan (780543) | about 2 years ago | (#42043971)

I find it hard to believe that the management of HP failed to uncover fraud of this magnitude during their evaluation in the purchase of Autonomy.

Really? In an era where regulators can't tell when a company's books are cooked [wikipedia.org] , let a former Nasdaq chairman can run the largest Ponzi ever [wikipedia.org] , and let insider traders and naked (aka illegal) short sellers cripple businesses and lives [deepcapture.com] (mostly [wikipedia.org] ) unworried, I fail to see what makes you think that HP's staff and lawyers might do a better job at identifying cooked books.

Re:Red herring (1)

Runesabre (732910) | about 2 years ago | (#42044209)

Regulators don't have the same skin in the game that company executives have with their own company. Oversight committees and regulators will never have the same level of motivation to ferret out every little detail because frankly there's no financial incentive to do so. It's not like regulators will make any more money working harder and longer by discovering fraud than if they just put in their 9-5. C-level execs, on the other hand, stand to make huge windfalls with these kinds of large deals and will know every little detail, risk and reward of the deal and leverage every resource to discover every little detail before making a decision. HP management either was grossly incompetent at evaluating this multi-billion dollar purchase or willfully negligent for who knows what reason.

My guess (5, Interesting)

Zontar_Thing_From_Ve (949321) | about 2 years ago | (#42044087)

I'm just making a wild guess here, but maybe upper HP management decided that Autonomy was the only possible means of getting HP back on track. This probably filtered down the chain of command to the people doing the investigation. They may have just chosen to gloss over anything that seemed funny because they were convinced that management did not want to find any problems as if this acquisition didn't go through, HP was going to get beat up financially in the stock market and more layoffs were likely. Or we have to accept that Autonomy was just insanely good at hiding their malfeasance even though various stock traders had been shorting the stock for months because they felt their financials were fishy and somehow the traders figured out what the investigators couldn't. I find that unlikely.

I see this as kind of a variation on the way that decisions sometimes got made in the old USSR. During the days of the Soviet Union, bureaucrats got into the habit of anticipating the needs/wishes of their superiors. I'm guessing that there's probably a culture of fear in HP where the masses are afraid of layoffs and those at the top probably shoot the messengers when they get bad news, so this was a natural outcome.

(CULTURE OF FEAR) Re: My guess (1)

happy_place (632005) | about 2 years ago | (#42044803)

"Culture of Fear" has been the unsaid logo of HP for the past 15 years. That, and "Screw the HP Way"... So yeah, good guess... :)

Re:Red herring (5, Insightful)

Patch86 (1465427) | about 2 years ago | (#42044137)

Autonomy was a successful money-making business. When HP bought it, there wasn't a soul alive who couldn't see that they were paying an extremely generous price. Take the following article on the BBC at the time:
http://www.bbc.co.uk/news/business-14582489 [bbc.co.uk]

HP paid 64% above the publicly-traded market price for the company. On the markets hearing the news, HP shares ended the trading day 7.6% down, making them the worst faller in the Dow Jones Industrial Average that day.

Maybe the management at Autonomy were telling porkies to convince HP to pay that much- but why the hell would HP swallow it? If everybody else could see it was mad, why couldn't they?

Re:Red herring (4, Informative)

greg1104 (461138) | about 2 years ago | (#42044277)

Here is the important line from the article you quoted:

"The implied valuation of the company is equivalent to 47 times the pre-tax profits earned by Autonomy in the 12 months to June this year."

If you buy a company on valuation terms like that, the way HP did, whoever voted for the decision should be held accountable by their stockholders and be facing jail time. If it happened because Autonomy sold them some story about future profit magic and they bought it, that does not change the fact that HP was criminally negligent in paying that much for a company.

Car analogy (1)

ThatsNotPudding (1045640) | about 2 years ago | (#42044581)

This is equivalent paying over Blue Book value for a stolen car that is not only on fire, but is also involved in a high-speed chase with the police during the purchase.

Re:Red herring (0)

Anonymous Coward | about 2 years ago | (#42044349)

Perhaps the Stanford MBA program should include classes on detecting and preventing fraud.

Re:Red herring (5, Interesting)

ShanghaiBill (739463) | about 2 years ago | (#42044423)

I find it hard to believe that the management of HP failed to uncover fraud of this magnitude ...

I have sat on a few boards (none nearly as big as HP) and I am not surprised in the least. The CEO wants to "make a deal" to "execute a strategic vision". So he sells it to the board, which is too busy with pissing contests and bike shed arguments [wikipedia.org] to spend much time on it. Then the deal is publicly announced. Only then is the "due diligence" done. If any problem is found, there is enormous pressure to "make the deal happen" to avoid losing face by unwinding the deal. 80% of all mergers end badly for both customers and shareholders, yet every CEO thinks his deal is one of the other 20%. HP was in a bad situation, with their commodity businesses in PCs and printers generating little profit and even less growth. So their "strategic vision" was to move into software and services. The Autonomy merger was part of that, and if it fell apart other potential partners would shy away, and the strategy shift would likely fail. So it is likely that the accountants pointed out lots of problems, but were overruled by people with too much at stake to let the deal fall through.

Re:Red herring (2)

Runesabre (732910) | about 2 years ago | (#42044695)

Thanks for the reply and +1 for giving me inspiring my personal education today as I looked up "bike shedding". Pretty informative and usable for future reference!

http://en.wikipedia.org/wiki/Parkinson's_Law_of_Triviality [wikipedia.org]

Re:Red herring (1)

sjames (1099) | about 2 years ago | (#42044541)

Remember folks, *THIS* is why they make the big bux!

Crashy (3, Interesting)

tomalpha (746163) | about 2 years ago | (#42043497)

I remember waybackwhen I last used Autonomy's categorisation and search engine. It wasn't very reliable and I never thought it did a very good job - neither the categorisation nor the searching. It always felt like a triumph of sales over engineering. I was amazed at the sale price to HP when it happened. Maybe this is something different, but somehow it rings true.

Re:Crashy (2, Funny)

Iniamyen (2440798) | about 2 years ago | (#42043551)

I remember waybackwhen I last consumed a Hostess Twinkie. It wasn't very edible and I never thought it was very satisfying - neither the breading nor the creamy center. It always felt like a triumph of sales over cooking. I was amazed what the labor unions wanted from the company when Hostess went under. Maybe this is something different, but somehow it rings true.

Re:Crashy (0)

Anonymous Coward | about 2 years ago | (#42044401)

I feel the same way about Wonder Bread, too.

Wait a second... (5, Insightful)

fuzzyfuzzyfungus (1223518) | about 2 years ago | (#42043513)

So, an 8.8 billion write-down on an 11.2 billion purchase and they are only alleging that "serious improprieties", rather than something like "epic, the-whole-boardroom-is-going-to-federal-country-club-for-maybe-five-years-or-so, fraud"?

Either corporate PR drivel is unusually polite, or white collar crime is absurdly superior on a risk/reward basis compared to little people crime...

Re:Wait a second... (0)

symbolset (646467) | about 2 years ago | (#42043815)

And now she will step down, leaving the company in the capable hands of Bill Veghte. Just as I predicted.

Re:Wait a second... (1)

garyebickford (222422) | about 2 years ago | (#42044317)

I don't know Bill Veghte - were you being serious, or ironic?

Re:Wait a second... (1)

MickyTheIdiot (1032226) | about 2 years ago | (#42044015)

Are you kidding? They're the elite! We're talking 100k fine, tops!

Re:Wait a second... (3, Insightful)

Sarten-X (1102295) | about 2 years ago | (#42044347)

Or losing $8.8 billion isn't that big of a deal to a company with revenues of $127 billion. A proportional loss to a middle-class family ($50,000 income) would be about $3,500. To use the obligatory car analogy, it's like buying a car that turns out to be a cleverly-concealed rusted-out lemon. Serious improprieties, and someone clearly screwed up badly, but it's not a company-risking mistake.

Due Diligence (0)

Anonymous Coward | about 2 years ago | (#42043517)

Do corporations even practice it anymore, or do they just leave it to the fast-dealing aquisition high-rollers within the company on the promise of big payoffs?

Re:Due Diligence (2)

Attila Dimedici (1036002) | about 2 years ago | (#42043669)

Why should they? The taxpayer will pick up the tab when they bet wrong. It is a win-win situation. If they get it right, they make big bucks. If they get it wrong, the tax payer will cover their losses.

Re:Due Diligence (0)

Anonymous Coward | about 2 years ago | (#42043871)

That's why this whole country is fucked and may fall apart within our lifetimes. We need to get our house in order ASAP and this sort of thing has to stop. Executives already make 600x what regular people do and they still aren't happy unless they get golden parachutes and bonuses even if they run a company into the ground. If we kicked these bastards out of the country after confiscating everything they have things would only get better. (the new people would be told they would be treated worse than the last guys if they pulled that shit again)

It is about finance and accounting (0)

Anonymous Coward | about 2 years ago | (#42043605)

Somebody else's money.... It is about finance and accounting, and not technology. Hence finance dudes know more about the "cloud" as they see it from their office windows every morning...

Muffy, you goofed (again). Suck it up, c..t (-1)

Anonymous Coward | about 2 years ago | (#42043617)

Gosh, suddenly the Repubs actually _need_ government - when it suits their narrow interests. Screw roads, schools, Medicare, Social Security, the EPA - but bring it on via the SEC when they need it. Ayn Rand might not like this so much, but I'm giggling my socks off.

Re:Muffy, you goofed (again). Suck it up, c..t (0)

Anonymous Coward | about 2 years ago | (#42044037)

Fraud is illegal and immoral. Did Ayn Rand claim otherwise?

So is this incompetence or collusion? (0)

Anonymous Coward | about 2 years ago | (#42043635)

Because it's one or the other.

Corp looking to committ suicide? Hire female CEO! (0, Troll)

Anonymous Coward | about 2 years ago | (#42043639)

Seriously, I hate to be sexist about this, but how often now do we have to see this pattern repeat before we acknowledge that hiring a catty, spoiled, narcissistic bitch to lead your company is a HORRIBLE FUCKING IDEA!

Re:Corp looking to committ suicide? Hire female CE (0)

Anonymous Coward | about 2 years ago | (#42043699)

It's not much better under a catty, spoiled, narcissistic MALE bitch, sorry to point out.

Re:Corp looking to committ suicide? Hire female CE (0)

Anonymous Coward | about 2 years ago | (#42043799)

Care to give a solid example instead of a hollow-yet-snappy retort?

Re:Corp looking to committ suicide? Hire female CE (2)

stokessd (89903) | about 2 years ago | (#42044303)

Care to give a solid example instead of a hollow-yet-snappy retort?

John Sculley

Re:Corp looking to committ suicide? Hire female CE (4, Insightful)

SirGarlon (845873) | about 2 years ago | (#42043731)

Hiring the male equivalent -- an abusive, spoiled, narcissistic dick -- to lead your company is also a horrible idea, but companies do it all the time. And fail. It's not about gender, it's about being an asshat.

Re:Corp looking to committ suicide? Hire female CE (2)

garyebickford (222422) | about 2 years ago | (#42044343)

Recent studies have shown that there are many similarities in the personality traits of psychopaths and successful leaders. The problem is where the fine line lies - or where it is put for a given company/nation.

Must be more to this story (2)

Tontoman (737489) | about 2 years ago | (#42043775)

Mike Lynch, the former CEO of Autonomy, has had a "midas touch" with respect to companies he has been associated with. He is commonly referred to as the "Bill Gates of the UK." The short time I worked for Autonomy (after they bought Verity, my former employer) my stock options showed surprising appreciation. Like google, their business is based on unstructured search algorithms. But their algorithm (Shannon's Information Theory) is published and peer reviewed.

tax savings galore (2)

kiite (1700846) | about 2 years ago | (#42043805)

Why is everyone bashing HP and Meg Whitman for this? The purchase happened pre-Meg, and this write-off is a great decision on HP's part. There's a fair chance that the purchase decision wasn't even as poor as HP's making it out to be, and this write-off is just being maximized for tax purposes.

Hate HP for making us individual taxpayers pick up the slack, but don't hate them for being stupid (in this case).

Re:tax savings galore (4, Interesting)

garyebickford (222422) | about 2 years ago | (#42044513)

Hate HP for making us individual taxpayers pick up the slack

So you are arguing that taxes should be paid on total gross revenue, regardless of costs? That's gonna make your grocery bill go up by about 30% (grocery stores typically run on 2% to 5% margins, so taxing on gross revenues instead of profits means they will pay taxes of 35% of the total bill rather than on the 2% profit.)

I'll just add that according to many economists, as a class corporations essentially don't pay taxes - they only pass those taxes on to customers (whether corporate or individual) as increased prices.

And if you think the money just goes to management, that's rarely true (though widely publicized). When competition is working as it should, corporations that keep the money that would have gone to taxes will be forced to reduce their prices to match their competitors. And if board management is working (which it often isn't), even if they can keep the prices and profits up, the money will be passed to the investors as dividends and/or stock price increases. Since the vast, vast majority of stock is held by institutions such as 401-K funds, pension funds and the like, most of the money still ends up eventually in the hands of individuals like you and me.

Re:tax savings galore (1)

BitZtream (692029) | about 2 years ago | (#42044595)

Whitman was on the HP board and voted for the purchase. She's not innocent in any shape or form, she didn't have the title but she made the same decision.

incapability (0)

Anonymous Coward | about 2 years ago | (#42043847)

Totally incapable of taking the blame for anything.

Ladies and Gentleman, your corporate class...

Step 1. Buy a really expensive company... (4, Informative)

Fubari (196373) | about 2 years ago | (#42043923)

Kind of depressing hearing about HP.
Step 1. Buy a really expensive company.
Step 2. Ignore it for a year or so.
Step 3. Rationalizing how to dramatically throw it away.
Step 4. Profit? Whats a few billion $ between friends?

Here's a longgg list of HP acquisitions [wikipedia.org] .

Some of the more notable ones that caught my eye:
Verifone 1997 $1.1 (billions)
Compaq 2002 24.0
P&G IT: 2003 3.0
Peregrin 2005 0.4
MercuryInter. 2006 4.5
Knightsbridge 2006 ?
Opsware 2007 1.6
EDS 2008 13.9
3Com 2010 2.7
Palm, Inc 2010 1.2
3PAR 2010 2.3
ArcSight 2010 1.5
Autonomy 2011 11.0
So have any of these actually been profitable for HP ?
I knew that Palm tanked (bye bye, WebOS).
I haven't heard good things about Knightsbridge.
Compaq seems like it was a break-even deal.

Re:Step 1. Buy a really expensive company... (5, Interesting)

sgtrock (191182) | about 2 years ago | (#42044527)

There's a very persuasive argument to be made that the Compaq acquisition is what really finished HP as an engineering company. Apparently there was some ferocious in-fighting after it. Sadly, the Compaq guys won for the most part and took the company to an almost entirely sales and marketing based strategy.

Those of us who cut our teeth on HP test equipment, early HP/UX workstations and servers, HP LaserJet printers, and HP calculators still mourn the death of Bill and Dave's dream. :-(

Engineering is also dodgy (1)

Anonymous Coward | about 2 years ago | (#42043991)

I worked at Autonomy for couple of months after they acquired Interwoven. Soon after acquisition all product roadmaps were frozen. So naturally all the Engg. Directors quit.One product was pulled from the market (Metatagger). Their entire business model is based on integrating several products to solve a search problem: Interwoven had a very strong product line up.(Thanks to Joe Cowan for selling us out)
Digtial Asset management(Media bin)
Records management(a spin off on Worksite)
Document management(Imanage Worksite, which Interwoven acquired)
Web content management(TeamSite and LiveSite)
Content publishing(OpenDeploy)

All frozen so that Autonomy's IDOL search engine can be sold as a Enterprise search engine targeting customers like BBC, Coca cola..
Who cares about the customers of those products, right.

Once a solution is sold with no testing(release cycles usually last one sprint 3-weeks max) and any support and bug fixes, customers are asked to pay for it, if they don't pay, look for other suckers, there were many when you promise seamless integration and enterprise search within a 3 weeks timeline, who wouldn't bite.

Working on such a schedule gave me nothing more than long hours, dissatisfaction and stress. I laughed my ass off when I heard about HP's valuation of Autonomy.

Nice bunch of people (5, Interesting)

BigBadBus (653823) | about 2 years ago | (#42044051)

I used to work for Autonomy. I have no sympathy for them.
My little article is here [usenetreader.co.uk]
After Autonomy's lawyers bullied me and anyone who supported me to take my article off line. I eventually lost my net access after Autonomy complained to BT, my ISP; they never issued an explanation or apology but still took money from my account. It took years and a letter to the BT chairman before I got a refund.
The article was originally subtitled "Stress Is More Fun" but seems to have got lost; if you read the article, you'll find out why it had this moniker. To find out what others think, look at Glassdoor [glassdoor.com]

misheard (2)

tverbeek (457094) | about 2 years ago | (#42044133)

"Autonomy"? I thought we were buying "Anonymous"!

Another blunder... (4, Funny)

erp_consultant (2614861) | about 2 years ago | (#42044147)

Ok, she is not directly responsible for this fiasco although she does admit to voting for the sale. Just seems odd that one bad move after another seems to follow her wherever she goes. Honestly, I think that her and Carly are locked in a fierce battle for worst CEO of all time. Oops...look out...Balmer is closing fast...

Re:Another blunder... (1)

Anonymous Coward | about 2 years ago | (#42044697)

I for one think ms Whitman's actions are pretty good for a CEO.
A, she is publicly admitting not being without culpability. Many CEOs are more scared about looking bad than making a decision.
B, by taking the loss upfront and inadvertedly admitting the Autonomy acqusitiion was pure shit she is getting the issue "off the table" and setting HP up for a come-back, as all future revenue from Autonomy will be deemed a brilliant save of face.
C, she's blaming an outside party for the majority of the errs, never a bad choice in an organisation
D, instead of taking a slow long-term petering out of profitability for the shareholders due to Autonomys shitty status she's moving the financial liability into a quick resolution (most likely short term loan or cash balance as well)
E, she is making decisions rapidly and with the hand she was dealt by her predecessor, not being a wimp and a pussy about it.

in other words, she's the cleaning lady de luxe!

Acquisitions 101 (0)

Anonymous Coward | about 2 years ago | (#42044657)

1. You don't buy a company or its projections or its but instead your buying its balance sheet.
2. Make sure to do an audit of its balance sheet
3.If you don't follow point 1 and point 2 its fair to say you have no clue of what is it that your buying
4.Remember there are no facts in accounting only estimates hence open to extensive debate/manipulation (even bank account values may differ between what you show on book and what bank says you have in your account)

Anyway its not hard to see HP's PC business go to China, like Lenova after a quasi state backied Chinese firm makes them 'an offer you cant refuse'

I have an idea! (1)

slashmydots (2189826) | about 2 years ago | (#42044663)

They should sue them! Oh wait, they own them. Damn, lol. My company actually did an even stupider, even more damaging acquisition in early 2011 so I can't laugh that hard but seriously, we have 4 servers and like 100 employees. When you scale up even higher, you should have the resources to look into this size of deal beforehand. I think she's just pulling ideas out of her ass so it looks like she's some big innovator and not properly reviewing them before implementing them. It's the "let's stop making desktops....aw fuck it, keep making desktops" kind of quick decisions that are going to get her ass fired.

Due Dilligence Fail (3, Interesting)

dave562 (969951) | about 2 years ago | (#42044687)

It never ceases to amaze me how often this happens. I have seen it first hand during an acquisition I was aware of, and here it is at HP. In the case I was aware of, my co-workers and others were doing everything we could to illuminate the problems before the acquisition went through, but the concerns fell upon deaf ears. It took years to clean up that mess. Of course the senior management who were responsible for the acquisition came through it unscathed, while the rest of us worked our asses off to "make it work". It looks like the same thing happened at HP.

As an executive, these people are paid to take care of these things. They are supposed to be able to handle M&A work. That is what all of those fancy degrees and business school is for. In the tech world, if you say that you can build an environment and then fail, it is obvious and you get fired. Yet some how in the C-suite world, if you say you can build a company and fail... nothing happens. I am totally in the wrong profession.

Family Guy (2)

Capt.DrumkenBum (1173011) | about 2 years ago | (#42044721)

Shut up Meg.
My warped mind goes there every time I see her name in an article.

I bet meg tries to socialize the loses (1)

Dan667 (564390) | about 2 years ago | (#42044761)

keep the money when you gamble, but get taxpayers to bail you out is a scam that needs to end.
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