HP to buy Autonomy for $11 billion(ft.com)
ft.com
HP to buy Autonomy for $11 billion
http://www.ft.com/cms/s/2/964fb710-c9d3-11e0-b88b-00144feabdc0.html#axzz1VSChuyXi
12 comments
Another way to look at this is that the CEO just announced plans to buy revenue. Some years from now, you will read about how revenues grew such-and-such percent under his management, and it will be up to analysts to guesstimate how much of that is due to operations and how much of that is due to acquisitions.
[deleted]
HP... Autonomy... really?
http://www.glassdoor.com/Reviews/Autonomy-Reviews-E11045.htm
Haha! Never saw that site before, but man are those some upset employees!
It certainly is a hell of a place to work as a developer. I was almost grateful for it in a way, it was my first professional developer job (they tend to hire fresh meat). But it taught me a lot about what not to do, and was a proving ground for my ability to work under pressure.
I'd almost recommend doing a stint in a place like it, makes you appreciate all your jobs afterwards. :-)
It certainly is a hell of a place to work as a developer. I was almost grateful for it in a way, it was my first professional developer job (they tend to hire fresh meat). But it taught me a lot about what not to do, and was a proving ground for my ability to work under pressure.
I'd almost recommend doing a stint in a place like it, makes you appreciate all your jobs afterwards. :-)
Even after today's surge (+75%), its market capitalization is $6.11B. Yesterday's market cap: $3.5B.
Why would HP pay 3X its market value?
Why would HP pay 3X its market value?
The normal reason for paying large premiums is that shareholders aren't interested in selling at the current market rate (otherwise in a liquid market they already would have). If you offer a small premium of say 10% investors might just think there is a better deal out there. Consequently the market value of the company may jump by 15% forcing you to make a new offer of 20% which the market still doesn't accept etc.. until you finally reach a negotiated price. From the numbers side of things this looks better for the buyer because you may end up with a lower buying price. However this way of buying a company takes time and is very messy, giving competitors room to organize to make competing bids or convince the board to split of specific parts of the company.
Adding to the normal premiums are the current market conditions and the vast sums of liquid assets large tech companies are sitting on. Firstly the general market is down which usually means shares of healthy companies are "undervalued" (difficult to tell if they really are, but that's the consensus). Secondly liquid assets are "expensive" to own at the moment, some banks are charging negative interest on large deposits and bonds are sitting at around 0%. If you're a tech company sitting on huge piles of cash this means you want to spend that money on anything as long as it gives more than 0% interest. Shareholders know that companies have a lot of money to spend so they can demand very high premiums.
Google bought Motorola mobility at a 63% premium so HP buying at 79% isn't all that strange. I wouldn't be surprised if Apple and Microsoft aren't also considering some big takeovers (GIGAOM reported that microsoft was also considering buyingMotorola) because this is the time to get get rid of those big piles of money they have.
Adding to the normal premiums are the current market conditions and the vast sums of liquid assets large tech companies are sitting on. Firstly the general market is down which usually means shares of healthy companies are "undervalued" (difficult to tell if they really are, but that's the consensus). Secondly liquid assets are "expensive" to own at the moment, some banks are charging negative interest on large deposits and bonds are sitting at around 0%. If you're a tech company sitting on huge piles of cash this means you want to spend that money on anything as long as it gives more than 0% interest. Shareholders know that companies have a lot of money to spend so they can demand very high premiums.
Google bought Motorola mobility at a 63% premium so HP buying at 79% isn't all that strange. I wouldn't be surprised if Apple and Microsoft aren't also considering some big takeovers (GIGAOM reported that microsoft was also considering buyingMotorola) because this is the time to get get rid of those big piles of money they have.
This sounds good and perhaps you have some financial experience to back this up, but I fundamentally disagree. At some point even a complex sale is just that...a sale, and this one is so questionable that anyone ignoring details like you put forth anyone would question this. Let alone the rumors of AU being a house of cards- in this market, HP should have walked and probably could have purchased AU for under $5B and the AU management would have run for the hills with the cash. Bottom line- it's a total enigma...time will tell!
Those figures you quote are sterling prices. E.g. yesterday it was £3.7Bn. It's about an 70% premium over market not a 3x
What do they make?
Has anyone here used Autonomy? It seems to be used in call centres to detect nuances in a person's words. What other type of data mining does it do?
...along with plans to spin off its personal computer business.
Damn, until now I'd missed that this wasn't "only" about phones and pads; HP's planning to become a software-only company! Very saddening.
Damn, until now I'd missed that this wasn't "only" about phones and pads; HP's planning to become a software-only company! Very saddening.
They are still holding on to their server business it seems. So they are doubling down on their enterprise solutions and services, not unlike IBM.
The "real" HP that most people think of was spun off as Agilent. HP that's left now is a hollow shell of its former self, just holding onto the brand name. Very sad.
According to press pundits, it is because Apotheker wants to turn HP into enterprise software+services company, like SAP and IBM.
won't they still sell servers?
As an ex employee of Autonomy, i must say that its actually good news for the employees. I spoke to my ex-colleagues and they sounded upbeat. Autonomy was a sweat shop. You were paid pittance and employees outside cambridge were hardly recognized. It was one of the worst companies to work for.
Well, HP supposedly used to be one of the best places to work, so maybe if you mix heaven and hell, you'll end up with purgatory.
I left EDS just before HP bought them out. Shortly after HP laid off a heap of my (former) colleagues. Anyone know how the HP/EDS thing is going now?
I've always thought that Autonomy had a strong whiff of fraud about it. I never hear anyone talk about working there, their financial reporting is often shadier than Groupon's, there's a Madoff-esque figure at the top (in the sense that he seems to be treated as almost godlike), and no-one seems to use its products.
I know it powers the FT's search facility and they joke about how useless it is.
My only explanation has been that it perhaps has a heavy focus on intelligence work.
I hope HP are prepared for some lengthy due diligence.
I know it powers the FT's search facility and they joke about how useless it is.
My only explanation has been that it perhaps has a heavy focus on intelligence work.
I hope HP are prepared for some lengthy due diligence.
I worked for them for a couple of years as a developer. They do have an underlying core technology developed in the very early days of the company which they have exploited to the absolute maximum possible. It works fairly well, but Bayesian analysis of documents is beginning to feel a little old hat.
To be honest I've been waiting for a startup to come around to attempt to disrupt this field, but none has arrived so far that can match the sales team at Autonomy.
They really do concentrate entirely on sales, and have some of the most driven sales people I've ever seen - largely due to seemingly ridiculous bonuses paid to sales staff. That does however lead to issues as some others here have described where they sell technology that doesn't exist - I could tell you some horror stories! The relationship between sales and development there, and the situations sales put the development team in, were the main reasons I left. Having projects dumped on you that were never even discussed with development, 2 weeks before the deadline for implementation, with requirements that were completely unrealistic does not make for good software.
Autonomy always felt like one of those circus performers with the spinning plates. You're always expecting it to collapse, but somehow the sales and legal teams keep the whole thing going.
To be honest I've been waiting for a startup to come around to attempt to disrupt this field, but none has arrived so far that can match the sales team at Autonomy.
They really do concentrate entirely on sales, and have some of the most driven sales people I've ever seen - largely due to seemingly ridiculous bonuses paid to sales staff. That does however lead to issues as some others here have described where they sell technology that doesn't exist - I could tell you some horror stories! The relationship between sales and development there, and the situations sales put the development team in, were the main reasons I left. Having projects dumped on you that were never even discussed with development, 2 weeks before the deadline for implementation, with requirements that were completely unrealistic does not make for good software.
Autonomy always felt like one of those circus performers with the spinning plates. You're always expecting it to collapse, but somehow the sales and legal teams keep the whole thing going.
I've negotiated against Autonomy before, on behalf of a customer. I've also used their products at various jobs. The company conducts itself like most enterprise vendors – everything is about making the sale while limiting the hard commitments that they make to their customers.
I hated using the product (specifically, iManage) because it was clearly not designed by or for users. It's just another slapped-on solution to shortcomings in the Microsoft platform (closed/obscure document format, lack of public APIs, etc.) I was not impressed by the product in any way whatsoever.
I hated using the product (specifically, iManage) because it was clearly not designed by or for users. It's just another slapped-on solution to shortcomings in the Microsoft platform (closed/obscure document format, lack of public APIs, etc.) I was not impressed by the product in any way whatsoever.
As corroboration, my first assignment at Autonomy basically amounted to writing (on-site) a component that had been sold without the existence of a single line of code.
I think the obstacles for a startup wouldn't come from Autonomy's core techology---more the amount of stuff they've acquired around the edges. Pieces like KeyView (which is fairly good at reading just about any file format you care to mention) make the whole Autonomy package much more attractive than their search tech would be on its own. Plus, as you said, you have to be willing and able to compete with their sales force, and that seems like a soul-selling endeavor from the beginning.
I think the obstacles for a startup wouldn't come from Autonomy's core techology---more the amount of stuff they've acquired around the edges. Pieces like KeyView (which is fairly good at reading just about any file format you care to mention) make the whole Autonomy package much more attractive than their search tech would be on its own. Plus, as you said, you have to be willing and able to compete with their sales force, and that seems like a soul-selling endeavor from the beginning.
Yes, the complete package is what they can offer big business. There are so many pieces to it now that they can turn it to a huge range of different uses.
The problem they have (well at least had when I was there a few years ago) is that nobody understands it all anymore. They've acquired so much technology and have such a high turn over rate of developers (barring a few extremely well rewarded key seniors) that its a constant uphill struggle to change anything or improve significantly, so developers have to just patch things up as best they can.
That burden will eventually catch up with them I would think, but I'm always surprised at how long a bad code-base can be kept alive.
The problem they have (well at least had when I was there a few years ago) is that nobody understands it all anymore. They've acquired so much technology and have such a high turn over rate of developers (barring a few extremely well rewarded key seniors) that its a constant uphill struggle to change anything or improve significantly, so developers have to just patch things up as best they can.
That burden will eventually catch up with them I would think, but I'm always surprised at how long a bad code-base can be kept alive.
Yeah, I have had similar experience. The start-up that will disrupt the space you speak of is PureDiscovery up north in Dallas. I assisted in a Purediscovery implementation in place of Autonomy and the client will never look back. First, they clearly do not have all the bells and whistles Autonomy has (that dont work that well), but on a side by side basis, I had a Purediscovery Index up in 4 hours and the results are light years better than Autonomy. We do not have to re-index our existing data either which is what I think makes the Purediscovery solution so unique. Its funny for me to see all of the comments now about Autonomy. I have been there! Where have all of these people been the past few years? Spinning plates...love it
Sounds like they might have been acquired for their sales team rather than their technology!
That is quite likely. They have a huge range of contacts amongst government, educational, financial and just about every other large organisation you can think of. If you wanted to get into retailing software to large business, they would be the people to talk to.
Given the HP CEO was at SAP he is probably wants to compete with Oracle.
That's hilarious. We kicked them out when the Brit super-salesman in a $10k suit made it clear that they are the most expensive product in the space.
Very old-school approach. Fancy books, etc. We have a stack of beautifully produced product viewbook things from propping up our fax machine.
Very old-school approach. Fancy books, etc. We have a stack of beautifully produced product viewbook things from propping up our fax machine.
Oh man, Autonomy. I know some people who worked there after the Interwoven acquisition. They uniformly described it as a disaster. Million-line codebases with no unit tests (and a UK dev office that didn't care). Routine selling of non-existent features, followed by dev getting shit on because they had to work over the weekend to make a proof-of-concept for it. High-priced sales-engineers who spend 6-8 weeks on site installing stuff, upselling on hardware and software the whole time.
As far as I can tell, the threshold for joining sales engineering there is surprisingly low.
BUT... keep in mind, they intentionally don't educate their pre- and post-sales folks about the actual capabilities and flaws in their approach. The training I got was basically useless---a week of having someone read the getting started guide to us.
Apparently, one of the earlier sales engineers had written a "real guide to IDOL" or some such, intended to help new sales engineers actually know what to do. Autonomy's CTO had all copies of it deleted, because it referred to bugs and shortcomings that they'd signed contracts claiming didn't exist.
BUT... keep in mind, they intentionally don't educate their pre- and post-sales folks about the actual capabilities and flaws in their approach. The training I got was basically useless---a week of having someone read the getting started guide to us.
Apparently, one of the earlier sales engineers had written a "real guide to IDOL" or some such, intended to help new sales engineers actually know what to do. Autonomy's CTO had all copies of it deleted, because it referred to bugs and shortcomings that they'd signed contracts claiming didn't exist.
I've met a couple of people who've worked there, one was quite bitchy about working conditions but you could get that at any company.
About 2000-2001 the company I was working for tried to buy a license to use their search software on our internal documents. It all fell apart for various reasons, including a price tag that was well in to six figures (Sterling) may even have been almost £1,000,000 my memory fails me as it wasn't going to be a good fit for our project anyway (long story.)
The tech they had then was very impressive when demoed, and I've heard even more amazing things about it since, but again, all in demos. I've not used the software direct, partly because I haven't worked for companies that could afford to use it.
About 2000-2001 the company I was working for tried to buy a license to use their search software on our internal documents. It all fell apart for various reasons, including a price tag that was well in to six figures (Sterling) may even have been almost £1,000,000 my memory fails me as it wasn't going to be a good fit for our project anyway (long story.)
The tech they had then was very impressive when demoed, and I've heard even more amazing things about it since, but again, all in demos. I've not used the software direct, partly because I haven't worked for companies that could afford to use it.
Autonomy is very good at selling demos for prices at and above what you're listing there.
I spent some time there in consulting, which amounted to attempting to convince customers that the demos they'd bought actually existed. In general, the demos were mixes of Perl and JavaScript that barely held together for the length of the demo, let alone scaled. Autonomy did have some internal large-scale success stories, but they tended to involve heroic (and large uncompensated) work after the sale and customers who were willing to repeatedly threaten to sue until said work was done.
I spent some time there in consulting, which amounted to attempting to convince customers that the demos they'd bought actually existed. In general, the demos were mixes of Perl and JavaScript that barely held together for the length of the demo, let alone scaled. Autonomy did have some internal large-scale success stories, but they tended to involve heroic (and large uncompensated) work after the sale and customers who were willing to repeatedly threaten to sue until said work was done.
They have a big building here in Cambridge where they employee 170+ people. The Company has been public for a long time (first floated on EASDAQ back in about 1999). I don't think there's anything shadier about it compared to any other enterprise software company.
"The Leader in Meaning Based Computing"
what does that even mean?!
what does that even mean?!
A type of PageRank.
Not sure how true that is.
At their most basic they do text classification and extraction, as well as document comparison. So you can index a whole load of documents, then train the system to recognise a particular type of document (based on any number of other training documents) and give it a specific classification.
The marketing spin is that you can extract 'meaning' from a whole load of text and deduce what a document is 'about'. Its not strictly true, but you can get a close approximation of that idea with decent training sets and classifications.
At their most basic they do text classification and extraction, as well as document comparison. So you can index a whole load of documents, then train the system to recognise a particular type of document (based on any number of other training documents) and give it a specific classification.
The marketing spin is that you can extract 'meaning' from a whole load of text and deduce what a document is 'about'. Its not strictly true, but you can get a close approximation of that idea with decent training sets and classifications.
The FT is pretty down about another UK company being sold to foreigners. Doesn't this count as an export? Haven't we just exported a $11bn asset?
Not quite the same as an export. We do get the cash yes, although we will be paying dividends abroad in the future.
I think the thinking is long term they might invest less in the uk, and it is one of our larger companies.
On the other hand it is a great uk startup story, we just need more of them... Though there was Xensource out of Cambridge too.
I think the thinking is long term they might invest less in the uk, and it is one of our larger companies.
On the other hand it is a great uk startup story, we just need more of them... Though there was Xensource out of Cambridge too.
For a company to buy an OS for $1.2 billion, then spend a fortune on developing a new class of device only to ditch it a month after launch along with it's entire infrastructure business, to then pay a massive premium for a software company in one particular space says an awful lot about the thought processes in HP. I can only assume that whoever makes the decisions has been prescribed something very, very powerful.
It's important to remember that there was some significant change in leadership during this sequence of events. Mark Hurd was CEO of HP at the time they bought Palm. The current CEO, Leo Apotheker, wasn't all that crazy about the product, and from what I've read in other places, was looking for a reason to can it. IMO, webOS devices didn't get a fair shot at HP. I believe that in hindsight, webOS will go down in history as one of those great operating systems that died for reasons not related to it's quality as an OS.
You also have to consider that making $1.2bn back on the Palm purchase wouldn't be all that difficult right now. HP has the straight forward option of simply selling the Palm patent portfolio of 1,600 patents from a company that was in the handheld device space long before most of the current players.
You also have to consider that making $1.2bn back on the Palm purchase wouldn't be all that difficult right now. HP has the straight forward option of simply selling the Palm patent portfolio of 1,600 patents from a company that was in the handheld device space long before most of the current players.
"I believe that in hindsight, webOS will go down in history as one of those great operating systems that died for reasons not related to it's quality as an OS."
Yes. I would say that webOS will more than likely be the beOS of the mobile world. Not that the two OS's are similar technologically, but in that they're both generally held in fairly high esteem but no one actually uses them.
Yes. I would say that webOS will more than likely be the beOS of the mobile world. Not that the two OS's are similar technologically, but in that they're both generally held in fairly high esteem but no one actually uses them.