After my post Dr Mike Lynch to quit HP, my day yesterday was occupied in media interviews culminating in an 
appearance on the BBC TV 10 o’clock news. This has resulted in wall to wall coverage in the FT, The Times and many other publications.
Although I have been pretty supportive of Mike Lynch and Autonomy, there have been other counter views. Autonomy has clearly not done well within the HP fold. Quoting from the FT today:
Although HP did not break out the Autonomy revenues, the overall software division saw second-quarter revenues rise just $173m from the same period last year, which was before the Autonomy deal. Given that Autonomy had quarterly revenues of around $250m before it was acquired, this implies a significant slowdown at either Autonomy or HP’s other software operations.
“Both sides are trying to put a spin on it and you have to take both sides with some caution. But there is no doubt the deal has not worked out in the way that HP wanted,” said Richard Holway, analyst at TechMarketView. “It is a bit like GM trying to run a F1 racing team.”
The suggestion is that they were 30% off their budget. Most companies would take action in such circumstances. Several readers contacted us to say that Autonomy was a bit dysfunctional on the management, accounting and sales management front even before it became part of HP. The suggestion was that it operated as a small company even when it became quite large. It should have grown up a bit more. Lynch too was criticised for his attitudes towards the City and its analysts. Indeed that Lynch was incapable of accepting any criticism. Anyone who disagreed with him was clearly a fool!
The most important thing to consider in any acquisition is culture. Clearly the Autonomy and HP cultures were very different. HP really should have known better! We did warn that this was the greatest risk in our very first post after the acquisition was announced last Aug. See HP and Autonomy.
So what now? Let me end with reprinting the last bit of Nic Fildes article in The Times today:
That task (of integrating Autonomy into HP) now falls to an Autonomy outsider, Bill Veghte, and there are fears that the entrepreneurial spark which turned an obscure algorithm based on the work of an 18th-century mathematician into a FTSE 100 business will be lost.
There is always the question of whether Dr Lynch will buy back the business he co-founded in 1996, perhaps teaming up with private equity to fund a deal.
Richard Holway, a veteran (enough of the ‘veteran…) tech analyst, said that HP could not afford to give up on data analytics given that companies such as IBM were investing heavily in the area. Instead he expected Dr Lynch to return to Cambridge with his team and build something substantial.
The word is that he has been quietly investing his money — he made $500 million through the HP deal — into start-up companies, suggesting that a clutch of “sons of Autonomy” may emerge.
Mr Holway said: “It’s a sad day but Lynch, who built this company up with no money, now he’s got £500m and a team that will follow him to the end of the Earth.”