Autonomy founder says HP allegations don't add up

Comments (3)
acebros wrote:

John Hempton (http://brontecapital.blogspot.com/2012/11/hewlett-packard-and-autonomy-notes-from.html?spref=tw)said “For the record here is how you could tell – just by looking at audited accounts – that Autonomy was not quite kosher….

Sales [in 2010] were $870 million. Receiveables were $330 million – which is four and a half months of receiveables. Deferred revenue is $177 million – just over half of receiveables.

This is really perverse for a software company. Software companies sell stuff that is barely tangible – they sell it up front and for cash. They have very few receiveables.

They do however have an obligation to service that software for a long time after they sell it – so the unearned income is relatively large (usually a multiple of receiveables).

Autonomy was booking as income lots of cash it had not received (which is why the receiveables were large) and not booking any obligation to provide future services for that income.

This is prima-facie suspect (and you could tell simply by looking at the balance sheet). All it required was basic applied accounting.”

This is a 30% – 50% effect on revenue, not “a few percent,” as suggested by Lynch. Who’s right?

Nov 23, 2012 2:34pm EST  --  Report as abuse
acebros wrote:

John Hempton (http://brontecapital.blogspot.com/2012/11/hewlett-packard-and-autonomy-notes-from.html?spref=tw)said “For the record here is how you could tell – just by looking at audited accounts – that Autonomy was not quite kosher….

Sales [in 2010] were $870 million. Receiveables were $330 million – which is four and a half months of receiveables. Deferred revenue is $177 million – just over half of receiveables.

This is really perverse for a software company. Software companies sell stuff that is barely tangible – they sell it up front and for cash. They have very few receiveables.

They do however have an obligation to service that software for a long time after they sell it – so the unearned income is relatively large (usually a multiple of receiveables).

Autonomy was booking as income lots of cash it had not received (which is why the receiveables were large) and not booking any obligation to provide future services for that income.

This is prima-facie suspect (and you could tell simply by looking at the balance sheet). All it required was basic applied accounting.”

This is a 30% – 50% effect on revenue, not “a few percent,” as suggested by Lynch. Who’s right?

Nov 23, 2012 2:34pm EST  --  Report as abuse
SyriasTruth wrote:

What this absurd event at HP shows, is that if a bluechip, well known corporation can lie and scheme to this extent under the very noses of auditors, and even the auditors who are double checking them. Then the stockholders of other companies, better get ready to check their investments. This systemic path that all of Wall Street is following is ruining investor confidence. These types of lies and scams are third world cheap fraud. There needs to be a huge change in stock regulation, investment banking, and banks. This has to stop.

THe stockholders are getting raped and robbed every single time these types of deals get done….get sweep under the collective carpet of Wall Street.

Nov 23, 2012 10:25pm EST  --  Report as abuse
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