

HP to buy Autonomy for $11 billion - whyleyc
http://www.ft.com/cms/s/2/964fb710-c9d3-11e0-b88b-00144feabdc0.html#axzz1VSChuyXi

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iuguy
For a company to buy an OS for $1.2 billion, then spend a fortune on
developing a new class of device only to ditch it a month after launch along
with it's entire infrastructure business, to then pay a massive premium for a
software company in one particular space says an awful lot about the thought
processes in HP. I can only assume that whoever makes the decisions has been
prescribed something very, very powerful.

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bradleyland
It's important to remember that there was some significant change in
leadership during this sequence of events. Mark Hurd was CEO of HP at the time
they bought Palm. The current CEO, Leo Apotheker, wasn't all that crazy about
the product, and from what I've read in other places, was looking for a reason
to can it. IMO, webOS devices didn't get a fair shot at HP. I believe that in
hindsight, webOS will go down in history as one of those great operating
systems that died for reasons not related to it's quality as an OS.

You also have to consider that making $1.2bn back on the Palm purchase
wouldn't be all that difficult right now. HP has the straight forward option
of simply selling the Palm patent portfolio of 1,600 patents from a company
that was in the handheld device space long before most of the current players.

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jordan0day
"I believe that in hindsight, webOS will go down in history as one of those
great operating systems that died for reasons not related to it's quality as
an OS."

Yes. I would say that webOS will more than likely be the beOS of the mobile
world. Not that the two OS's are similar technologically, but in that they're
both generally held in fairly high esteem but no one actually uses them.

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AlexMuir
I've always thought that Autonomy had a strong whiff of fraud about it. I
never hear anyone talk about working there, their financial reporting is often
shadier than Groupon's, there's a Madoff-esque figure at the top (in the sense
that he seems to be treated as almost godlike), and no-one seems to use its
products.

I know it powers the FT's search facility and they joke about how useless it
is.

My only explanation has been that it perhaps has a heavy focus on intelligence
work.

I hope HP are prepared for some lengthy due diligence.

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benjamind
I worked for them for a couple of years as a developer. They do have an
underlying core technology developed in the very early days of the company
which they have exploited to the absolute maximum possible. It works fairly
well, but Bayesian analysis of documents is beginning to feel a little old
hat.

To be honest I've been waiting for a startup to come around to attempt to
disrupt this field, but none has arrived so far that can match the sales team
at Autonomy.

They really do concentrate entirely on sales, and have some of the most driven
sales people I've ever seen - largely due to seemingly ridiculous bonuses paid
to sales staff. That does however lead to issues as some others here have
described where they sell technology that doesn't exist - I could tell you
some horror stories! The relationship between sales and development there, and
the situations sales put the development team in, were the main reasons I
left. Having projects dumped on you that were never even discussed with
development, 2 weeks before the deadline for implementation, with requirements
that were completely unrealistic does not make for good software.

Autonomy always felt like one of those circus performers with the spinning
plates. You're always expecting it to collapse, but somehow the sales and
legal teams keep the whole thing going.

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jgmatpdx
As corroboration, my first assignment at Autonomy basically amounted to
writing (on-site) a component that had been sold without the existence of a
single line of code.

I think the obstacles for a startup wouldn't come from Autonomy's core
techology---more the amount of stuff they've acquired around the edges. Pieces
like KeyView (which is fairly good at reading just about any file format you
care to mention) make the whole Autonomy package much more attractive than
their search tech would be on its own. Plus, as you said, you have to be
willing and able to compete with their sales force, and that seems like a
soul-selling endeavor from the beginning.

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benjamind
Yes, the complete package is what they can offer big business. There are so
many pieces to it now that they can turn it to a huge range of different uses.

The problem they have (well at least had when I was there a few years ago) is
that nobody understands it all anymore. They've acquired so much technology
and have such a high turn over rate of developers (barring a few extremely
well rewarded key seniors) that its a constant uphill struggle to change
anything or improve significantly, so developers have to just patch things up
as best they can.

That burden will eventually catch up with them I would think, but I'm always
surprised at how long a bad code-base can be kept alive.

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raganwald
Another way to look at this is that the CEO just announced plans to buy
revenue. Some years from now, you will read about how revenues grew such-and-
such percent under his management, and it will be up to analysts to
guesstimate how much of that is due to operations and how much of that is due
to acquisitions.

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teyc
Has anyone here used Autonomy? It seems to be used in call centres to detect
nuances in a person's words. What other type of data mining does it do?

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jgmatpdx
The call center tech was acquired; I don't suspect much of it ever had
anything to do with their core product.

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mootothemax
_...along with plans to spin off its personal computer business._

Damn, until now I'd missed that this wasn't "only" about phones and pads; HP's
planning to become a software-only company! Very saddening.

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hboon
They are still holding on to their server business it seems. So they are
doubling down on their enterprise solutions and services, not unlike IBM.

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latch
"The Leader in Meaning Based Computing"

what does that even mean?!

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known
A type of PageRank.

~~~
benjamind
Not sure how true that is.

At their most basic they do text classification and extraction, as well as
document comparison. So you can index a whole load of documents, then train
the system to recognise a particular type of document (based on any number of
other training documents) and give it a specific classification.

The marketing spin is that you can extract 'meaning' from a whole load of text
and deduce what a document is 'about'. Its not strictly true, but you can get
a close approximation of that idea with decent training sets and
classifications.

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d4nt
The FT is pretty down about another UK company being sold to foreigners.
Doesn't this count as an export? Haven't we just exported a $11bn asset?

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justincormack
Not quite the same as an export. We do get the cash yes, although we will be
paying dividends abroad in the future.

I think the thinking is long term they might invest less in the uk, and it is
one of our larger companies.

On the other hand it is a great uk startup story, we just need more of them...
Though there was Xensource out of Cambridge too.

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madeinindia
HP... Autonomy... really? <http://www.glassdoor.com/Reviews/Autonomy-
Reviews-E11045.htm>

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benjamind
Haha! Never saw that site before, but man are those some upset employees!

It certainly is a hell of a place to work as a developer. I was almost
grateful for it in a way, it was my first professional developer job (they
tend to hire fresh meat). But it taught me a lot about what not to do, and was
a proving ground for my ability to work under pressure.

I'd almost recommend doing a stint in a place like it, makes you appreciate
all your jobs afterwards. :-)

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sceptre
As an ex employee of Autonomy, i must say that its actually good news for the
employees. I spoke to my ex-colleagues and they sounded upbeat. Autonomy was a
sweat shop. You were paid pittance and employees outside cambridge were hardly
recognized. It was one of the worst companies to work for.

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andrewljohnson
Well, HP supposedly used to be one of the best places to work, so maybe if you
mix heaven and hell, you'll end up with purgatory.

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rorrr
Even after today's surge (+75%), its market capitalization is $6.11B.
Yesterday's market cap: $3.5B.

Why would HP pay 3X its market value?

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Protagoras
The normal reason for paying large premiums is that shareholders aren't
interested in selling at the current market rate (otherwise in a liquid market
they already would have). If you offer a small premium of say 10% investors
might just think there is a better deal out there. Consequently the market
value of the company may jump by 15% forcing you to make a new offer of 20%
which the market still doesn't accept etc.. until you finally reach a
negotiated price. From the numbers side of things this looks better for the
buyer because you may end up with a lower buying price. However this way of
buying a company takes time and is very messy, giving competitors room to
organize to make competing bids or convince the board to split of specific
parts of the company.

Adding to the normal premiums are the current market conditions and the vast
sums of liquid assets large tech companies are sitting on. Firstly the general
market is down which usually means shares of healthy companies are
"undervalued" (difficult to tell if they really are, but that's the
consensus). Secondly liquid assets are "expensive" to own at the moment, some
banks are charging negative interest on large deposits and bonds are sitting
at around 0%. If you're a tech company sitting on huge piles of cash this
means you want to spend that money on anything as long as it gives more than
0% interest. Shareholders know that companies have a lot of money to spend so
they can demand very high premiums.

Google bought Motorola mobility at a 63% premium so HP buying at 79% isn't all
that strange. I wouldn't be surprised if Apple and Microsoft aren't also
considering some big takeovers (GIGAOM reported that microsoft was also
considering buyingMotorola) because this is the time to get get rid of those
big piles of money they have.

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scottishing
This sounds good and perhaps you have some financial experience to back this
up, but I fundamentally disagree. At some point even a complex sale is just
that...a sale, and this one is so questionable that anyone ignoring details
like you put forth anyone would question this. Let alone the rumors of AU
being a house of cards- in this market, HP should have walked and probably
could have purchased AU for under $5B and the AU management would have run for
the hills with the cash. Bottom line- it's a total enigma...time will tell!

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4J7z0Fgt63dTZbs
What do they make?

