Oracle’s Ellison Vindicated in Autonomy PR Flap by HP’s $8.8 Billion Writedown
You may recall a brief PR kerfuffle in which Oracle disclosed that it had been approached by investment banker Frank Quattrone, who was, as some people have it, shopping Autonomy around for a possible acquisition. Some people, including Quattrone and Autonomy’s founding CEO Mike Lynch, wouldn’t call it “shopping around” because it would have been illegal to “shop around” a U.K.-based company under that country’s securities laws without disclosing the fact to shareholders. But we’re getting ahead of ourselves here.
Remember, however, that in the wake of HP’s move to acquire Autonomy, Ellison said that at something north of $11 billion, HP had paid an “absurdly high” price, and cattily followed that by saying that Oracle had “taken a pass” on Autonomy.
Lynch, in an interview with The Wall Street Journal days later, said that no such overtures to Oracle had ever been made.
Oracle, just to set the record straight, mind you, with absolutely no other agenda in mind, fired back that Lynch apparently had a bad memory and had forgotten about a meeting, indeed a pair of meetings, involving Hurd, Lynch and Quattrone and some PowerPoint slides.
“Oh, you mean those slides,” Lynch said. No, he didn’t really say that, but he might have. Anyway, at that point, Lynch clarified that he had indeed accepted an offer to meet Hurd to talk about database technologies but he was “not there to sell anything.” Okay, then.
Again, just to clarify the record and nothing else, Oracle dug through its files and found the PowerPoint slides from at least two meetings that Lynch and Quattrone had held with Hurd. Quattrone owned up that the slides were his and that the idea had been to pitch Autonomy to Oracle independently of Lynch or Autonomy “as an idea.”
Autonomy had already been the subject of repeated rumors about a nonexistent bidding war for the company that had Oracle and Microsoft wrestling over it. And the meetings at Oracle took place in early 2011 after those rumors had been in the water a little while.
So yesterday’s disclosures by HP certainly put an exclamation mark on a back-and-forth between Oracle and Lynch that had simply quieted but not concluded.
Which brings us to those slides. What’s in them? Some interesting nuggets for sure, but there are no smoking guns concerning Autonomy’s alleged cooking of the books prior to HP’s announcement that it would acquire the software firm on Aug. 18, 2011.
On one slide we see Autonomy’s revenue mix as of early 2010. (Click to make bigger.) Note that the IDOL Product that makes up the blue slice of 29 percent of sales is the “hardware product” that in HP’s telling is the one sold either at a low margin or at a loss in some cases. Those allegedly improper bookings, HP says, amounted to 10 percent to 15 percent of Autonomy’s overall sales, and would otherwise be about half the size shown here.
In another slide we see Autonomy’s revenue and enterprise value as of January 24, 2011 — less than six months before HP’s acquisition — converted to U.S. dollars and compared against other notable software companies. Autonomy is valued at about $5.7 billion, or a little less than six times revenue. Six months later HP would pay nearly twice a much, which struck pretty much anyone paying attention as odd if only for the timing of the deal. Now HP says it paid about $5 billion too much for Autonomy and that amount lines up almost exactly with the increase in Autonomy’s valuation from this point. Coincidence? Maybe. But, interesting! (Click to see it bigger.)
And here we see a list of names of both Autonomy senior executives and members of its board of directors. As yet there’s no indication who it was from within the ranks of Autonomy who came forward to HP after Lynch’s dismissal from HP by CEO Meg Whitman, and so there’s no way to know if this person’s name appears here. Also, Autonomy’s former directors will almost certainly be contacted by both the U.S. Securities and Exchange Commission and the U.K.’s Serious Fraud Office. (Click to see it bigger.)
If you want to read those slides in their entirety yourself, here they are, via Scribd.
- More From Mike Lynch: HP’s Autonomy Accusations Are Getting Weaker
- Mike Lynch Punches Back at Today’s HP Filing: Whither $5B Writedown?
- HP Confirms DOJ Is Investigating Alleged Fraud in Autonomy Deal
- Yes, There Are Layoffs Pending at HP’s Autonomy Unit in the U.K.
- Former HP CEO Shifts Blame for Autonomy Deal to Chairman
- Dell Passed on Autonomy Before HP Bought It
- Why Mike Lynch Is Playing PR Hardball With HP
- Autonomy Founder Lynch Asks Board to Explain HP Allegations
- Autonomy Founder Lynch Blames Accounting Standards in HP Flap
- The Red Flags That Were Obvious — To Some — In the HP-Autonomy Deal
- Oracle’s Ellison Vindicated in Autonomy PR Flap by HP’s $8.8 Billion Writedown
- Autonomy Founder Mike Lynch Rejects HP Charges, Alleges Mismanagement
- What Exactly Happened at Autonomy?
- HP Explains Its $8.8 Billion “Oops”
- HP Beats Street Amid Sales Declines, Takes $8.8 Billion Charge
- HP Names Microsoft Exec Robert Youngjohns to Run Autonomy
- Search Under Way at HP for Autonomy’s Next Chief
- Autonomy’s Mike Lynch Talks About Being HP’s Speedy Tiger Cub (Video)
- Britain’s First Software Billionaire Now Reports to HP CEO Meg Whitman
- Oracle Launches Exalytics Machine, Probably Ending Spat With Autonomy
- Autonomy: When All Else Fails, Blame the Bankers
- Mike Lynch to Oracle: Oh, You Mean Those Slides
- Oracle: You Have a Very Bad Memory, Mr. Lynch
- HP Reportedly Close to $10 Billion Buyout of Autonomy, PC Unit Spinoff
- Will Oracle and Microsoft Bid on Autonomy?