Background:

http://www.nypost.com/p/news/business/it_unprintable_OCkB6QLsQpe24xzRece8hO

Hewlett-Packard’s decision to buy UK business software company Autonomy — and the subsequent 20 percent drop in stock price the news produced — puts the world’s largest tech company in a vulnerable position and may make it an Oracle takeover target, The Post has learned.

For shareholders and insiders there were few answers to explain why HP paid so much for Autonomy.

The Palo Alto, Calif., company trades at less than one times revenue, and announced late Thursday it was paying 10 times revenue, or more than $10 billion, for British software maker Autonomy.

If you’ve never heard of Autonomy, their main product is IDOL:

The main technology, ‘Intelligent Data Operating Layer’ (IDOL), allows search and processing of text taken from database, audio, video or text files or streams. The processing of such information by IDOL is referred to by Autonomy as Meaning-Based Computing.

Autonomy’s technology attempts to understand any form of unstructured information, whether text, voice, or video, and based on that understanding perform automatic operations such as but not limited to, “you like that, you’d like this” on the information.

Interesting technology, for sure. However is this is certainly the right time, economically speaking, to be buying this stuff? And, also, solid gold Maybachs. I’d like 10 of those, please.

Then, start here:

http://www.oracle.com/us/corporate/press/503333

Qoute:

After listening to Mr. Lynch’s PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr. Kehring and Mr. Hurd told Mr. Lynch that with a current market value of $6 billion, Autonomy was already extremely over-priced.  The Lynch shopping visit to Oracle is easy to verify.  We still have his PowerPoint slides.

And they weren’t kidding:

http://www.oracle.com/us/corporate/features/autonomy-presentation-1-503341.pdf

http://www.oracle.com/us/corporate/features/autonomy-presentation-2-503342.pdf

Autonomy’s CEO Mike Lynch continued to say they weren’t shopping to Oracle, so, in traditional Oracle fashion, they expanded on it in a style only they can do:

Another Whopper from Autonomy CEO Mike Lynch

REDWOOD SHORES, Calif., September 28, 2011

Oracle issued the following statement:

“Autonomy CEO Mike Lynch continues to insist that Autonomy was never ‘shopped’ to Oracle.  But now at least he remembers and admits to meeting with Oracle President Mark Hurd and Doug Kehring, Oracle’s head of M&A, this past April.  But CEO Lynch insists that it was a purely technical meeting, limited to a ‘lively discussion of database technologies.’  Interesting, but not true.

from:

http://www.oracle.com/us/corporate/press/503343

And even made a nice little pretty URL:

Oracle.com/PleaseBuyAutonomy

to help remind Mike of what went on.  Not only does Mike Lynch seem a bit crazy, it confirms Leo’s horribly destructive role as CEO of HP, if your competitors, as well as your stockholders, don’t see why you paid so much. HP looks like a day trader trying to get in to the bubble the day before it bursts, both with Autonomy and the Touchpad debacle. Hey, at least they didn’t destroy a beloved product like AVOS and Delicious.