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Does HP Want Autonomy?

Hewlett Packard this week denied reports that it's looking to sell its troubled Autonomy unit and the EDS services business it acquired nearly five years ago for $14 billion.

It's the latest scuttlebutt surrounding a company that continues to appear lost and can't seem to escape bad news such as yesterday's confirmed report that the architect of its public cloud effort Zorawar "Biri" Singh, senior vice president and general manager, has left the company. Singh's departure was first reported by All Things D. See more on that in my Cloud Report blog.

While the EDS business may have issues at the moment and HP last year took an $8.9 billion write down for that deal, services are a key driver of business for rival IBM and it's hard to envision HP selling it off at this time.

As for Autonomy, which HP famously acquired for the astronomical -- actually, it's fair to say "ludicrous" -- price of $10.3 billion. I was among the skeptics at the time. Its approximate $1 billion in revenues never justified the valuation, a conclusion Oracle reportedly made many months before HP took the bait.

CEO Meg Whitman ultimately came around to agree that HP not only overpaid for the company but said it was duped by Autonomy's founders accusing them of "serious accounting improprieties" and "a willful effort by Autonomy to mislead shareholders," thereby taking a massive $8.8 billion write off. Founder Mike Lynch, who HP fired last May, adamantly denied the accusations, set up a blog to defend his position and accused HP of backtracking.

Former CEO Leo Apotheker pushed for the deal but he was unceremoniously dismissed before it closed. Whitman decided to go ahead with the purchase. After a whistleblower apparently came forward, HP had investigated the matter and Whitman went on CNBC making no bones about the fact the company felt it was the victim of massive fraud. The company has referred the matter to the SEC and the U.K Fraud Office (Autonomy was a British company).

An interesting Reuters report said HP's Apotheker and then chief strategy officer Shane Robison, who Whitman later dismissed, blindly went into the Autonomy deal out of desperation. Apotheker defended the deal in a statement to Bloomberg.

While all of this went down in in the closing weeks of 2012, it resurfaced this week when reports came out that several Silicon Valley companies were interested in acquiring EDS and Autonomy. Whitman's denial certainly could be posturing for a better deal but many believe Autonomy is of value to HP despite the incredulous price it paid for it.

One such believer is IDC chief research officer Crawford Del Prete. "When you talk to customers, what you find is that if you have an unstructured data problem, if you have a problem around syntax, if you have a problem around search, Autonomy has got some really useful technology," he told CNBC. "Autonomy can really help in a world where you have a mix of structured and unstructured data."

HP also has Vertica, a company it acquired in 2011 to help build data warehouses to discover structured data. The move to manage Big Data is a hot agenda item and an area not lost to other key IT players including IBM, Oracle, EMC, Google and Microsoft.

Would you like to see HP keep and emphasize Autonomy or do you envision building your data management and e-discovery efforts around other platforms such as the SharePoint-SQL Server tandem (along with Exchange and Windows Server of course) . See what SharePoint 20013 will offer in that regard. 

What's your take? Drop me a line at [email protected].


Posted by Jeffrey Schwartz on 01/18/2013 at 1:14 PM


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