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December 14, 2012

Leo Apotheker: Don’t blame me for Autonomy debacle

Former HP boss deflects attention onto HP board

By Cbr Rolling Blog

Former HP CEO Leo Apotheker had shifted blame for the firm’s disastrous acquisition of Autonomy to its board of directors, claiming the decision was not his alone.

Apotheker was in charge of the Silicon Valley giant when it made the decision to ditch its PC division and focus on becoming a software and services firm. The $11.1bn acquisition of Autonomy was integral to that.

While there has been plenty of finger-pointing over the last few months, most of the blame has been put on Apotheker for paying too much. Now Apotheker has decided to defend himself and said the blame should be shared by HP’s board of directors.

In a statement sent to Bloomberg, he said: "No single CEO is ever able to make a decision on a major acquisition in isolation, particularly at a company as large as HP — and certainly not without the full support of the chairman of the board."

"The HP board, led by its chairman, met many times to review the acquisition and unanimously supported the deal, as well as the underlying strategic objective to bolster HP’s market presence in enterprise data," his statement added.

One of those board members was Meg Whitman, who replaced Apotheker when he left after less than a year in charge.

That strategic objective – shifting away from low-end PC making to focus on software and services – was rejected once Apotheker had been sacked. HP decided to keep its PC division while increasing its capabilities in the software and services space.

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Apotheker said he believes that was still the right decision and claimed that HP’s continued struggles suggest it is still not on the right track.

"Looking back on my time at HP, I still believe the strategic vision that we tried to implement was sound," he said. "HP was and still is in need of a transformational strategy. Unfortunately, I was never given the opportunity to implement the strategy in its totality. The new leadership has now been in place longer than my 11-month tenure. But it’s clear that HP still is in search of the right path forward."

The Autonomy deal, which was central to Apotheker’s objective, has joined a long list of disastrous HP software purchases. Earlier in 2012 Mike Lynch, Autonomy’s founder, left HP following months of poor performance. As CBR revealed at the time, Lynch was just the latest in a long list of Autonomy executives to leave the company following its acquisition.

HP then publicly accused Autonomy of accounting improprieties, suggesting the company had falsified accounts to inflate its value ahead of the acquisition. That resulted in an $8.8bn write-down, $5bn of which was related to the accounting issues.

"Some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company," HP claimed.

"These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management’s ability to fairly value Autonomy at the time of the deal," the statement added.

Autonomy hit back, with Lynch demanding that HP publicly reveal what evidence they have. His statement suggested the accusations were an attempt to deflect attention from HP’s poor management of Autonomy post-acquisition.

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