[BITList] Fwd: Autonomy disaster is a symptom HP's problems, not the cause

[M.j. Feltham]

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> 	Thursday, November 22, 2012
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>  	SHANE
> RICHMOND
> HEAD OF TECHNOLOGY
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> Techbriefing
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> TALKING POINT	 		 	Follow Shane on Twitter
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>  	Autonomy disaster is a symptom HP's problems, not the cause
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> By Christopher Williams
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> Whatever the final upshot of HP’s allegations that the former management of Autonomy, the British software firm it acquired for £7.1bn little over a year ago, the controversy has served to highlight serious strategic problems at one of Silicon Valley’s iconic firms.
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> Mike Lynch, the founder of Autonomy, has furiously denied that the firm used irregular accounting practices to inflate its value. That maybe a matter for the Serious Fraud Office and FBI to settle, but Mr Lynch has also taken the opportunity to criticise HP’s “flip-flopping”.
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> “What actually happened is that they mismanaged Autonomy and in doing that have destroyed a lot of shareholder value,” he said.
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> Buying Autonomy to shift HP towards software and services was the brainchild of Leo Apotheker, its chief executive at the time, who aimed to follow a path successfully beaten by IBM. He re-emerged this week to insist the due diligence process on the deal was “meticulous”.
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> Mr Apotheker did not last long at the helm after the Autonomy deal. His other big strategic move, abandoning HP’s smartphone and tablet efforts, was also widely questioned. Although webOS, its mobile operating system, was not a strong rival to iOS and Android, completely giving up on mobile computing, the technology industry’s most innovative sector, seemed rash to many eyes.
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> HP said it wanted to concentrate on the corporate market, apparently failing to appreciate that business technology is increasingly driven by consumers. Apple’s iPads are finding their way into enterprises because executives buy them to use at home.
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> The blame for HP’s malaise cannot be laid entirely at Mr Apotheker’s door, however. He took over from Mark Hurd who was forced out by a sexual harassment scandal. Mr Hurd’s tenure was characterised by aggressive cost-cutting and the acquisition of the services firm EDS, which itself resulted in a multibillion-dollar write-down.
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> Now HP finds itself the owner of a software business in Autonomy that it cannot have fully understood, a very low margin PC making business, a shrinking printer business and various other odds and sods that do not make a coherent whole in the age of cloud computing and mobile devices.
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> Meg Whitman, HP’s current chief executive, must have believed she had no choice but to reveal the allegations against Autonomy, but the inevitable firestorm they have sparked risks diverting attention from her real problems.
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> If there has been fraud, investors will naturally want to see some money recouped in the courts. Either way, they would rather HP rediscovers its direction.
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