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Blame game in full swing as HP's Autonomy claims stoke furore

20 Nov 2012
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As fallout continues in HP's $8.8bn write-off and allegations against Autonomy, analysts believe that the deal will go down as one in which many individuals share blame.

HP said on Tuesday that it would have to write off most of the $10.2bn it spent to acquire the British firm, accusing Autonomy executives of using misleading accounting methods to cook the company's books.

The deal was at the time among the largest in HP's history and will be forever linked to the brief run of Leo Apotheker as HP chief executive.

For Victory Basta, managing director at analyst firm Magister Advisors, the deal is also emblematic of the pitfalls HP faces with its new corporate strategy.

"HP are clearly on a mission to change but it was essential they worked first to fix the culture and revamp the business before making a game-changing acquisition," Basta noted.

"HP's leadership made a huge mistake by attempting to 'fix by buying'."

Basta noted that the licence-based business model which Autonomy employed can make it difficult to evaluate a firm's growth potential. With such uncertainty, the analyst believed HP allowed itself to be duped by unrealistic growth rates.

"Put that speed of growth and the one-off sales model together and you have a business that is incredibly difficult to value and very challenging to manage and integrate," he said.

"Candidly, it was like putting an 18-year-old who just passed their driving instruction behind the wheel of a Ferrari."

HP bosses, however, are not the only ones who should take the blame for the failed acquisition.

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Shaun Nichols
About

Shaun Nichols is the US correspondent for V3.co.uk. He has been with the company since 2006, originally joining as a news intern at the site's San Francisco offices.

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