It turns out that when it spent $11.1bn to acquire Autonomy in september 2011, Hewlett-Packard overpaid a tad. Despite accounting firms and lawyers who reviewed the books, apparently nobody realized the acquisition was being valued, like, 400% too much.
At the time, I was among the many who could not believe their eyes – without being six-figure Wall Street analysts, we all wondered what the hell did H-P see in Autonomy to justify the huge price tag.
Then-CEO Leo Apotheker (who initiated the deal) says he is shocked and was misled by Autonomy’ management, current CEO Meg Whitman (who closed the deal) must have been too busy in more important stuff (more important than 10 friggin’ billions ? Holy shit!!
Well, I do not care what the expert may have said, we’re talking of the management of the world’s largest computer company, should they not understand the market in which they have operated all their lives? Should they not think twice before spending shareholder’ money on an acquisition that common sense, before expert’ reports, screamed could not be right?
If I were an HPQ shareholder, I’d file immediately a class action to redress the $8.8bn which were wasted in what must surely be the stupidest acquisition ever: I’d claw back lawyers’ and accountants’ fees, CEO and all upper management salaries and bonuses, as well as the multimillion severances paid to Apotheker and Lynch. It won’t be enough, but I bet it would pay back at least ten cents on the dollar.
To put the size of the mistake in perspective, Hewlett-Packard recently announced it will be cutting 27,000 jobs: the writedown on the Autonomy acquisition, a direct, unforgivable management blunder, would be enough to pay the full salaries to all these people for over 4 years.