Now that Hewlett-Packard has finally put together its case against Autonomy, it’s time again to assess how paranoid Hewlett-Packard’s management is. Autonomy is the software company Hewlett-Packard overpaid for a few years ago, and after a subsequent management shakeup at Hewlett-Packard, the new managers made wild allegations of accounting fraud at its new subsidiary. A good long time has gone by, and Hewlett-Packard has now added numbers to its allegations, but there is still no evidence. The gist of the report is the assertion that Autonomy was not entitled to recognize revenue from products sold to value added resellers. However, there aren’t any accounting rules or computer industry conventions to support that assertion. It is just a rule that Hewlett-Packard made up because its case against Autonomy was so empty.
Corporations make wild allegations often enough, but the more worrying thing about the case was that it seemed to reinforce signs of a paranoid streak in the board and management at Hewlett-Packard. The good news is that there is little sign of that paranoia in this latest report. It appears more a defensive action, perhaps drawn up by lawyers hoping to deflect the investor lawsuits that may be forthcoming against Hewlett-Packard for its conduct in the case. The company promised to deliver a report, here it is, maybe the whole case can go away quietly now.
It is almost impossible for a company in retreat to look good, and Hewlett-Packard’s plan to imitate IBM’s approach doesn’t look so smart now that IBM itself is mired in cutbacks and layoffs. On the other side, its former core business of printers and laptops is so weak it is preparing to spin off that unit. We can be sure that a new turnaround plan will come out after that spinoff. It may not look pretty, but the company is still standing.
