When HP offered $11bn (£7bn) to buy Autonomy, pretty much everyone said it was overpaying. And when Leo Apotheker, the HP CEO who initiated the purchase, was tossed overboard and replaced by former eBay CEO Meg Whitman, she had every opportunity to call a halt to proceedings, but didn't.
Today, Mike Lynch, the co-founder and CEO of Autonomy who is now being 'let go' by HP, may well be wishing that she had. Certainly, he won't walk away empty-handed. HP's willingness to pay a 64 per cent premium for the company meant that both he and co-founder Richard Gaunt were each credited with about £566m into their respective current accounts when the takeover was completed.
Lynch had quickly become frustrated at the bureaucracy of HP – not simply the level of bureaucracy, but the way in which it was exercised. Indeed, members of staff who beat Lynch to the exit say that working with HP was like being water-boarded on a daily basis, according to the Financial Times.
But Lynch is among the last, rather than the first, of Autonomy's senior executives to leave following the acquisition. Sushovan Hussein (president), Steve Chamberlain (chief financial officer), Pete Menell (chief technology officer), Nicole Eagan (chief marketing officer), Andy Kanter (chief operating officer) and Martina King (head of Aurasma) are all among the senior staff that left the company following the HP takeover.
According to reports, as many as one-third of employees have left since the HP takeover. Such a loss of staff in a knowledge-led company does not bode well.
The spotlight was thrown on Autonomy after a disappointing set of second quarter results, which were released on Wednesday. While HP's revenues declined by $939m (£599m) to $30.69bn (£19.6bn) – a fall of three per cent – the focus was very much on Autonomy, and the growing problems there.
While Autonomy's revenues were not separated out from HP Software's, the figures indicate a significant shortfall in revenues. HP Software posted revenues of $970m (£619m), but in the same quarter a year earlier – before the Autonomy acquisition – they weighed in at $797m (£508.6m). In other words, Autonomy added around $170m (£108.5m), at best, in revenues when prior to HP's acquisition it had been achieving quarterly revenues of about $250m (£159.5m).
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