4 ms·

HP did limited due diligence due to their incompetence but there was definitely significant fraud at Autonomy.

hilux 2y ago
I'm amazed that Lynch got off. Legal technicality? Would love to see an analysis and explanation.
seanhunter 2y ago
Yup. For example at the time I was IT director of a doc com in the UK. Autonomy came to me and pitched their product, which was basically an enterprise-wide indexer thing which you could point at a file share and it would index all the documents, including looking inside MS Office files and then you could search it all. So quite far ahead of its time for what must have been like 1999 or so. I told them their product didn't really meet any pressing need we had and was a bit expensive so thanks but no thanks. They came back with the proposal that instead of buying the software I could buy (from them) a really expensive NAS and they would throw the indexer in for free and the advantage for me would be that because it was hardware the expenditure could be written off against tax over time as depreciation. It sounded sketchy so I didn't bite, but in essence they pitched me on the exact fraudulent thing that he was acquitted of.
- mike_hearn 2y ago
  Wait, how is bundling hardware and software sketchy or illegal? That's the entire business model of many of the world's most successful companies.
  - foldr 2y ago
    Presumably based on intent. In the extreme case, you'd be selling someone a lettuce for a lot of money with "free" bundled software (so that they can then get some kind of tax write-off when the lettuce goes rotten).
  - seanhunter 2y ago
    Nothing sketchy about that per se, but the fraud element of the case centred around the allegation that autonomy didn't correctly account for the distinction between hardware and software sales when giving numbers to HP leading to an inflated (software based) multiple being used for the valuation at acquisition. They were (allegedly) selling expensive disk drives for cost plus and telling investors they were making a software sale which obviously have very different growth characteristics as businesses.

I'm amazed that Lynch got off. Legal technicality? Would love to see an analysis and explanation.

Yup. For example at the time I was IT director of a doc com in the UK. Autonomy came to me and pitched their product, which was basically an enterprise-wide indexer thing which you could point at a file share and it would index all the documents, including looking inside MS Office files and then you could search it all. So quite far ahead of its time for what must have been like 1999 or so. I told them their product didn't really meet any pressing need we had and was a bit expensive so thanks but no thanks. They came back with the proposal that instead of buying the software I could buy (from them) a really expensive NAS and they would throw the indexer in for free and the advantage for me would be that because it was hardware the expenditure could be written off against tax over time as depreciation. It sounded sketchy so I didn't bite, but in essence they pitched me on the exact fraudulent thing that he was acquitted of.

mike_hearn 2y ago
Wait, how is bundling hardware and software sketchy or illegal? That's the entire business model of many of the world's most successful companies.
- foldr 2y ago
  Presumably based on intent. In the extreme case, you'd be selling someone a lettuce for a lot of money with "free" bundled software (so that they can then get some kind of tax write-off when the lettuce goes rotten).
- seanhunter 2y ago
  Nothing sketchy about that per se, but the fraud element of the case centred around the allegation that autonomy didn't correctly account for the distinction between hardware and software sales when giving numbers to HP leading to an inflated (software based) multiple being used for the valuation at acquisition. They were (allegedly) selling expensive disk drives for cost plus and telling investors they were making a software sale which obviously have very different growth characteristics as businesses.