|By Maureen O'Gara||
|November 21, 2012 08:00 AM EST||
HP Tuesday morning charged its Autonomy acquisition with massive fraud.
It claims it was the victim of accounting improprieties and disclosure failures made by the publicly held British company prior to its acquisition last year by HP and downright misrepresentations made to HP in connection with the ultimately $12 billion and something acquisition.
As a result HP will write off most of the inflated purchase price and take an $8.8 billion non-cash charge, worse than the $8 billion goodwill charge HP took this summer on its EDS acquisition.
HP has turned the case over to the SEC and the UK's Serious Fraud Office for civil and criminal prosecution. HP CEO Meg Whitman said the company would also press its own civil and criminal charges against certain unnamed individuals seeking redress for its benighted stockholders. She expects it all to take years.
HP said that after Autonomy founder Mike Lynch was fired earlier this year because the unit was significantly underperforming an unidentified senior member of Autonomy's staff blew the whistle on the company's inflated margins and phony growth rates, and the slight-of-hand that got it so overvalued.
A seven-month internal investigation ensued, leading HP to conclude that Autonomy was overvalued all along.
That investigation is still going on but it found that Autonomy misstated its financial performance, including its revenue, core growth rate and gross margins, and misrepresented its business mix.
Margins were inflated from 28% to 45% by passing low-end hardware sales off as IDOL software license sales; VAR license fees were paraded as revenue when no end customer existed at the time of the sale; VARs paid high up-front fees in exchange lower future fees; and revenues were pulled forward. The idea was to suggest better growth than existed.
"This appears to have been a willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers," HP said in a statement. "These misrepresentations and lack of disclosure severely impacted HP management's ability to fairly value Autonomy at the time of the deal."
Whitman said HP's board, which voted to make the Autonomy acquisition, "feels terribly" about all this but depended on financials audited by Deloitte and re-audited by KPMG before doing the deal. "You have to depend on audited results," she said, although neither accounting firm tumbled to what had been going on.
Apparently PricewaterhouseCoopers' forensics team finally caught it after in was brought in in May.
According to Meg, "blogs" at the time of the acquisition questioned Autonomy's revenue recognition and what it called a sale but Autonomy's management was allowed to run the reports to ground with the pair of original auditors and claimed there was nothing to them.
After listening to the HP conference call Tuesday morning Lynch "flatly rejected" HP's allegations, "which are false."
Meg blamed her predecessor Leo Apotheker and former head of R&D and strategy Shane Robison. Due diligence at HP no longer reports to M&A, as it was when Apotheker was therem but it's kind of late in the day to give it to the CFO.
Robison has yet to be heard from, but Apotheker, who orchestrated the Autonomy acquisition, issued a statement to the Wall Street Journal saying he was "stunned and disappointed" to learn of thr alleged accounting improprieties and defended HP's due diligence as "meticulous and thorough."
He pointed out that since Autonomy was a public company "much of the process relied on public financial reports - accounting statements approved, filed and backed by Autonomy's leadership, board and auditors" and offered to make himself available "to assist HP and the appropriate authorities to get to the bottom of this."
Autonomy's shenanigans account for $5.3 billion of the charge; the rest stems from HP's declining stock price, which has been in free fall since Apotheker said it was buying Autonomy and disposing of HP's PC unit in order to turn HP into a software company. The company quickly disposed on Mr. Apotheker, replacing him with Whitman, who went through with the Autonomy acquisition and decided to keep PCs. Most outsiders couldn't understand the Autonomy buy.
Although Autonomy's long-term financial performance is expected to be impacted by the mess, Whitman says the company is "100% committed to Autonomy" and expects it to play a "significant role" in HP's recovery.
The disclosure was part of Hewlett-Packard's quarterly report. It lost $6.85 billion, or $3.49 a share, compared to a profit of $239 million, or 12 cents a share, this time last year. Revenue was $29.96 billion, down 4%. Adjusted EPS was $1.16. Analysts were expecting adjusted earnings of $1.14 a share, on revenue of $30.44 billion.
HP said revenue from its PC unit was down 14% since commercial revenues dropped 13% and consumer revenue plunged 16%. Revenue in the enterprise, servers, storage and networking segment dropped about 9%. Printing sales fell about 5%. Services fell about 6%. Software revenue was up 14%.
HP's battered shares were down 12.48% to $11.64 in pre-market trades on the news, dropped further as the market woke up and then recouped slightly to $11.87, down 10.68%. Its stock has lost over 48% this year and the company had $21.8 billion in long-term debt at the end of its fiscal fourth quarter
NHK, Japan Broadcasting, will feature the upcoming @ThingsExpo Silicon Valley in a special 'Internet of Things' and smart technology documentary that will be filmed on the expo floor between November 3 to 5, 2015, in Santa Clara. NHK is the sole public TV network in Japan equivalent to the BBC in the UK and the largest in Asia with many award-winning science and technology programs. Japanese TV is producing a documentary about IoT and Smart technology and will be covering @ThingsExpo Silicon Val...
Apr. 28, 2017 01:15 AM EDT Reads: 9,248
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
Apr. 28, 2017 12:45 AM EDT Reads: 1,667
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
Apr. 28, 2017 12:15 AM EDT Reads: 1,360
Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the USA and Europe, we work with a variety of customers from emerging startups to Fortune 1000 companies.
Apr. 27, 2017 10:45 PM EDT Reads: 2,428
Financial Technology has become a topic of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 20th Cloud Expo at the Javits Center in New York, June 6-8, 2017, will find fresh new content in a new track called FinTech.
Apr. 27, 2017 10:30 PM EDT Reads: 2,450
@GonzalezCarmen has been ranked the Number One Influencer and @ThingsExpo has been named the Number One Brand in the “M2M 2016: Top 100 Influencers and Brands” by Analytic. Onalytica analyzed tweets over the last 6 months mentioning the keywords M2M OR “Machine to Machine.” They then identified the top 100 most influential brands and individuals leading the discussion on Twitter.
Apr. 27, 2017 10:30 PM EDT Reads: 1,295
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Apr. 27, 2017 10:15 PM EDT Reads: 9,241
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Apr. 27, 2017 10:15 PM EDT Reads: 1,469
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
Apr. 27, 2017 10:00 PM EDT Reads: 2,062
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Apr. 27, 2017 09:45 PM EDT Reads: 892
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
Apr. 27, 2017 09:15 PM EDT Reads: 9,120
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Apr. 27, 2017 09:15 PM EDT Reads: 7,300
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Apr. 27, 2017 09:15 PM EDT Reads: 1,281
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
Apr. 27, 2017 08:45 PM EDT Reads: 2,508
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
Apr. 27, 2017 08:00 PM EDT Reads: 1,143
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
Apr. 27, 2017 07:45 PM EDT Reads: 2,317
SYS-CON Events announced today that Grape Up will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company specializing in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the U.S. and Europe, Grape Up works with a variety of customers from emergi...
Apr. 27, 2017 06:45 PM EDT Reads: 2,233
The age of Digital Disruption is evolving into the next era – Digital Cohesion, an age in which applications securely self-assemble and deliver predictive services that continuously adapt to user behavior. Information from devices, sensors and applications around us will drive services seamlessly across mobile and fixed devices/infrastructure. This evolution is happening now in software defined services and secure networking. Four key drivers – Performance, Economics, Interoperability and Trust ...
Apr. 27, 2017 06:45 PM EDT Reads: 762
@ThingsExpo has been named the Most Influential ‘Smart Cities - IIoT' Account and @BigDataExpo has been named fourteenth by Right Relevance (RR), which provides curated information and intelligence on approximately 50,000 topics. In addition, Right Relevance provides an Insights offering that combines the above Topics and Influencers information with real time conversations to provide actionable intelligence with visualizations to enable decision making. The Insights service is applicable to eve...
Apr. 27, 2017 06:30 PM EDT Reads: 2,841
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
Apr. 27, 2017 06:00 PM EDT Reads: 1,058