Meg Whitman Says HP Was Defrauded By Autonomy; HP Stock Plunges 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.
Re:Meg, Carly (Score:5, Informative)
She wasn't the CEO of HP when the acquisition happend this one isn't her fault.
Re:Meg, Carly (Score:5, Informative)
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,
Comment removed (Score:4, Informative)
Step 1. Buy a really expensive company... (Score:5, Informative)
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:Meg, Carly (Score:4, Informative)
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:Red herring (Score:5, Informative)
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.
Re:Red herring (Score:4, Informative)
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:Meg, Carly (Score:4, Informative)
Example: PayPal lets you open an account with minimal information, and lets you send money to that account no limits.
Now suppose you're a European citizen. The second you receive more than 2500 euros in your account, they're going to lock it and ask you to provide extra information to prove who you are.
They do this *after* they let you open the account, and *after* the money is in said account.
Then, if you can't or won't provide the information they ask (passport, proof of address), they'll lock your account with your funds in it. They'll only allow you to get the funds after 180 days, and you must initiate the process, or they'll just keep the money.
A bank would never be allowed to do such a thing. They'd have to verify who you were *before* they gave you an account, and they would never be allowed to lock your funds for half a year _after_ you received said funds. Unless you were part of a criminal investigation, of course.
Re:Meg, Carly (Score:5, Informative)
No...Ebay eventually made money on the Skype purchase.
They bought for 2.6 billion in 2005
Sold 70% of it for $1.9 billion in 2009
Made an additional $2.55 billion when Microsoft bought the remaining 30%.
So they actually made 1.85 billion on an initial investment of 2.6 billion. Not terrible over 7 years.