
Autonomy made 80% less UK profit than stated, Hewlett-Packard finds - reirob
http://www.theguardian.com/business/2014/feb/03/autonomy-profits-overstated-hewlett-packard
======
ig1
"Ernst & Young, the auditor hired by HP, had not signed off Autonomy's
restated accounts."

Which basically makes this a non-story. If the independent auditor you hired
isn't willing to stand behind your view you probably shouldn't announce it.

~~~
VBprogrammer
I'm not sure I fully understand your comment. My understanding of this is that
even after the revised accounts the auditor was still unwilling to put his
name on the line. The implication in my eyes is that the books are still in
pretty bad shape and could be worse.

Is there some reading of this that I'm not getting?

~~~
andyjohnson0
Thats the way I read it too.

------
bane
The one time I dealt with Autonomy was sitting in on some of the sales process
to a large non-profit. I hadn't really heard of them or seen their products
anywhere at all, yet they were apparently doing well. I think this was around
the time they bought Verity so there was a lot of buzz in the air that
Autonomy could be the next Google and it'd be good to get in with them.

During their 20 allotted minutes, the Autonomy sales guy provided an _hour_
long virtuoso demonstration of a decidedly uninteresting basic search
appliance with an enormous price tag that would have bought them six times as
much if the non-profit just hired a staff to build it all from scratch from
the ground up.

The non-profit was looking for big-data analytics and got a demo of some very
uninteresting, _very_ basic, text analytics tools, and a half-hour dog and
pony show about how they could build whatever more sophisticated analytic
tools they needed, and oh yeah, there would be a very long and very expensive
enterprise integration period.

The sales guy then made sure to mention that the next day he wouldn't be able
to do any follow up since he took a position in another sales office in a
different state, so follow up with some other guy who wasn't present at the
demo.

Of course having run well over their allotted time-budget (always a great way
to see if a company respects contractual budgets), the CEO didn't have time to
ask questions like "presumably you've built more interesting text analytics
tools before, we can't be the only ones asking for these pretty basic things,
why would we pay more for you to 'develop' them again?" and similar.

Fast forward a week, meeting with the other guy to finish feeling things out
(there were some integration pieces they were still interested in). The non-
profit was basically told that his business wasn't worth the time of this very
junior sales guy because his other clients were talking about bigger
engagements. And that to get more of his effort, they'd have to consider a
larger package with more included services (on-site consultants). He left
halfway through the meeting to go joke and throw a football with some of his
buddies down the hall for a few minutes, in full view of our group, while the
CEO of the non-profit sat his mouth agape, came back and asked if we'd decided
to move on or go with the bigger deal so we could get his full attention.

It was pretty much this experience that put them into the "corrupt as fuck
snake oil peddlers" category for me and none of this news surprises me in the
least.

~~~
tootie
I have experience with the CMS platform (TeamSite) that they purchased a while
back and it seems to be a perfect cultural fit. Insanely priced software that
has fewer features than WordPress despite a manual longer than the Oxford
Bible.

------
gadders
We evaluated Autonomy vs Google Search Appliance at an ex-employer. The GSA
worked out of the box, the Autonomy Search needed a consultant in every week
to try and tune it as the results were crap.

~~~
bane
see
[https://news.ycombinator.com/item?id=7184030](https://news.ycombinator.com/item?id=7184030)

I was also very unimpressed with their stock technology. And it was obvious
they were trying to attach as many consulting hours to the sale as possible.

It felt like a very old, late 90s era search engine, one of the ones with lots
of banner ads, with a few of the internals exposed so you could get various
metrics off of it.

> needed a consultant in every week to try and tune it

This also feels familiar to me, something about constantly massaging the
system till it started giving optimal results or something. I think "tending
the garden till it bears fruit" was the phrase used (it was almost 10 years
ago now!)

~~~
gadders
Of course, the organisation ended up buying it anyway because some twit in
another part of the organisation had signed a site license :-(

------
timthorn
Mike Lynch gave a talk at Cambridge Uni last night. The synopsis:

> The session will look at how the vision needs to meet with reality. The
> entrepreneur needs to be true and wedded to their beliefs and vision for the
> business venture, but also, to be open to learning and taking feedback. It
> is important to be flexible with business models in the early days. This
> session demonstrates the importance of entrepreneurial self-awareness for
> learning and reflection purposes as well as the need for personal direction,
> drive, persuasion and persistence. Participants will learn about strategy
> and developing business models to achieve the vision. It will look at the
> influence of early customers and sales and the role of mentors, company
> directors, etc. in shaping business models.

~~~
acqq
"Who is Mike Lynch and What's the Deal with Autonomy and Hewlett-Packard?"

[http://www.ibtimes.co.uk/who-mike-lynch-whats-deal-
autonomy-...](http://www.ibtimes.co.uk/who-mike-lynch-whats-deal-autonomy-
hewlett-packard-1435095)

"So what's Lynch up to now? He, together with some former Autonomy bosses,
have started technology investment firm Invoke Capital, which has a $1bn fund
to play with.

Its first investment was in Darktrace, which calls itself "the world's first
Behavioural Cyber Defence platform" "

~~~
ZeroGravitas
I don't know anything about this story but the above two posts, but I'm
guessing the bad guy in this story is Mike Lynch.

------
DrJokepu
Autonomy is really an embarrassment for the entire British technology
industry.

~~~
fidotron
Yep. The Brits (I'm one, but have spent most of my career elsewhere) do a
special line in cowboy technology types, and Autonomy just blagged their way
into a monster deal.

It's a shame because at the same time there are genuinely great companies, but
the more pure sales culture led outfits have been so slimy it's frightening,
and make life much harder for the people doing great work.

And that's ignoring the defence industry, which takes it to a whole new level.

------
smoyer
Who spends $7b on a company that claims $870m anyway? ... That's way to high
unless you knew that future business was on it's way. On the other hand, HP
seems to be really good at buying dying businesses, or buying businesses that
have potential and killing them off.

~~~
mattzito
10x revenue is not irrational in a high-margin software business. It's high,
but there's a lot of acquisitions, especially by big companies like IBM, HP,
etc. that are at that multiple.

~~~
smoyer
True ... but they weren't really high margin as it was a "solution sale". In
this case, 2X-3X would be more the norm since you have a much harder time
scaling this type of company.

~~~
mattzito
I'd disagree. Software that is heavy on consulting is still considered high
margin as long as the consulting is revenue neutral (not a cost center). So if
you write software that requires lots of consulting _that the customer pays
for_ , it still can be high margin.

The other consideration is whether the customer considers the software
critical to their business operations or a core differentiator for them vs. a
commodity solution. I would argue that, truth notwithstanding, the message of
autonomy was that they were a high value software - data consolidation and
search.

------
dschiptsov
Welcome to the modern word of business "optimizations" and uncontrolled
leverage.)

Russian "businessmen" would really appreciate this because cheating, finding a
greater fool is the default strategy nowadays and doing this uncaught
considered to be very very clever.)

------
chrisgd
And yet auditors, investment bankers, accountants, and consultants still get
their fee for this disaster. And that is before we start talking about tall
the HP people involved in diligence and the acquisition. Finally, shareholders
are last in this arrangement, yet in every CEOs discussion they are always
first.

------
ulfw
Somebody somewhere must have gotten really rich with this sale.

~~~
woofyman
Mike Lynch got really rich. I worked for Autonomy after they purchased my
employer, Interwoven. They were horrible people to work for. We always thought
they were cooking the books. Their products were shit. I quit that job because
I had fuck you money.

~~~
logicallee
I don't get it - how did you 'have fuck you money' while working there? From
that acquisition or something else?

~~~
adventured
I'd assume he held stock in Interwoven.

