The Documents HP didn’t show

HP today published an email from former Autonomy CFO Sushovan Hussain to former CEO Mike Lynch, from 10 December 2010, which it claims is evidence of a “CFO in panic” about the performance of the business. It contends this situation caused Mr Lynch to decide to sell the whole company to HP.

This email is taken wildly out of context, reflecting the CFO’s frustrations about the forecasting by parts of the sales force, and how that tracked against internal forecasts. HP has purposefully not shown other emails in the series, showing that Autonomy was on track to meet its expected revenues for the quarter, and indeed did so.

Analyst expectations for Q4 2010 were for revenue of $241 million. The following email shows that the forecast for Q4 on 13 December, despite the concerns in the U.S. identified on 10 December, was still $252 million:

HP Autonomy email

The final result for the quarter came in at $244.5 million, reflecting the fact that some of the revenue had not come in as indicated in the mail of 10 December, but still ahead of market expectations. Below is a copy of the final financial statement that was released to the market:

HP Autonomy Financial Statement

HP is taking an isolated incident to try to paint a picture of a company that was in some way in trouble. The email it has posted actually shows that Autonomy was trying hard to beat market expectations by a significant distance, and the frustrated overreaction of a stressed executive to the management of its internal sales forecasts. It has overlooked the fact that Autonomy delivered on market expectations, and the revenue was converted into cash.

Further, HP is suggesting that this situation led Mike Lynch to take the “radical action” of selling the whole company to HP. This is insanity. Not least because HP had already approached Autonomy about buying it!

This approach by HP is shameful and purposefully misleading. The full facts show that everything was handled properly, nothing was hidden and Autonomy was a strong business performing well. It is HP’s allegation of a “multi billion dollar fraud” that is imaginary.

 

An update from Mike Lynch

Thank you for coming to this site over the past few weeks. It has now been over a month since Meg Whitman, the CEO of Hewlett Packard, launched a series of allegations against me and my former colleagues. This site will remain the place where we post information that is relevant for the outside world as we continue to reject these allegations.

I’m glad that people have taken the time to hear from me directly. I would also like to take this moment to thank everyone for the huge amount of support and friendly messages you have sent to us through the site. This has been a very difficult time and we appreciate your support a great deal.

Ever since Meg Whitman launched these accusations we have been asking what she meant. I’m sorry to say we have got no further and we are still waiting for her to explain her claims and provide the material on which they are based.

As I have said before, we do not understand the allegations, or how they could possibly add up to a write down of over $5 billion.

In the absence of greater clarity from Meg, we are looking now to HP’s 10-K filing that is due before the end of the year. This document should  contain information about finances and management that all American businesses are required to lodge each year with the U.S. Securities and Exchange Commission. We look forward to HP providing in it a comprehensive disclosure and explanation of its position and calculations.

I won’t go into the detail of our rebuttal again, for it is set out clearly in the open letter published here on the site. All I will say is that I look forward to this situation being resolved as soon as possible.

The technology industry remains one of the most exciting areas in the world to live and work in. New innovations are taking place every day, all around us. I am looking forward to 2013 being another year of tremendous progress.

Thank you again for your interest and support.

Merry Christmas,

Mike Lynch