But, "Some customers report that support is not responsive, even in the face of substantial deployment or functionality issues, and that their issues are ignored until the are escalated. These customers report that is takes a big effort to get Autonomy to respond. Feedback from clients and prospects indicates that the sales teams can be difficult to negotiate with, that the product is expensive, and that sales is not selling the right solution to the problem," they wrote.
HP's acquisition plan was controversial from the start. When Autonomy went on the market, HP rival Oracle said that it thought the price was overvalued. Consultant Craig Ball at the time said he agreed. "I predict a $2 billion write-down … within five years," he said. (Ball is a Law Technology News advisory board member.) Today on his blog Ball said it "turns out the deal was far worse than even this vocal naysayer imagined."
HP, in its statement, laid the blame squarely on the doorstep of former company executives: "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. These misrepresentations and lack of disclosure severely impacted HP management’s ability to fairly value Autonomy at the time of the deal," the HP statement continued. "HP has referred this matter to the US Securities and Exchange Commission’s Enforcement Division and the UK's Serious Fraud Office for civil and criminal investigation. In addition, HP is preparing to seek redress against various parties in the appropriate civil courts to recoup what it can for its shareholders. The company intends to aggressively pursue this matter in the months to come."
Autonomy founder Michael Lynch, who left HP in May, denied knowing of any fiscal irresponsibility in a Wall Street Journal story.
Overshadowed by the scandal, HP today said it lost $6.9 billion for its fourth quarter of 2012, despite earning $30 billion in revenue. For the year, HP lost $12.7 billion on revenue of $120.4 billion. Whitman said HP is one year into a five-year turnaround plan.
Evan Koblentz is a reporter for Law Technology News. Send email or follow him on Twitter.
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Liu Pei
How to estimate a target company' value is always a tough task.
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