Well HP isn't exactly simply raising doubts about where blame lies, they are flat out blaming Automony for fabricating earnings.
Originally Posted by C-Note
"HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics..."
as for analyst being "more right in this case" i'd disagree on that in the sense that they were NOT right about fraud and not one claimed fraud that i read at the time. They claimed that HP was paying too much. But it's a big difference between knowing HP is making a bad deal and knowing that they are making a bad deal because the underlying company is fabricating earnings. The end result is the same, a bad bargain. But those analyst were simply correct in the outcome. I remember one analyst saying how at the projected earnings it simply wouldn't be a good deal unless they kept up that rate of growth for like 8 years which was unreasonable because earnings were at the time about doubling in size or something like that. They were at least growing at a very rapid rate year over year. And I think Oracle passed on it cause the price was too high if i remember. But point is i think they thought the price even with the fake earnings was too high. Not the even worse price factoring in the fabricated earnings. check this out: Oracle Issues Statement
"Although HP’s investigation is ongoing, examples of the accounting improprieties and misrepresentations include:
- The mischaracterization of revenue from negative-margin, low-end hardware sales with little or no associated software content as “IDOL product,” and the improper inclusion of such revenue as “license revenue” for purposes of the organic and IDOL growth calculations.
- This negative-margin, low-end hardware is estimated to have comprised 10-15% of Autonomy’s revenue.
- The use of licensing transactions with value-added resellers to inappropriately accelerate revenue recognition, or worse, create revenue where no end-user customer existed at the time of sale.
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." HP Issues Statement Regarding Autonomy Impairment Charge
"After HP agreed to acquire Autonomy for over $11.7 billion dollars, Oracle commented that Autonomy had been 'shopped' to Oracle as well, but Oracle wasn't interested because the price was way too high. Mike Lynch, Autonomy CEO, then publically denied that his company had been shopped to Oracle. Specifically, Mr. Lynch said, "If some bank happened to come with us on a list, that is nothing to do with us." Mr. Lynch then accused of Oracle of being 'inaccurate.' Either Mr. Lynch has a very poor memory or he's lying. 'Some bank' did not just happen to come to Oracle with Autonomy 'on a list.' The truth is that Mr. Lynch came to Oracle, along with his investment banker, Frank Quattrone, and met with Oracle's head of M&A, Douglas Kehring and Oracle President Mark Hurd at 11 am on April 1, 2011. After listening to Mr. Lynch's PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr. Kehring and Mr. Hurd told Mr. Lynch that with a current market value of $6 billion, Autonomy was already extremely over-priced. The Lynch shopping visit to Oracle is easy to verify. We still have his PowerPoint slides."Regardless if Leo somehow was part of fabricating earnings we'll surely find out. Little guys will flip on him when faced with prison time. Should get interesting.