Autonomy Trial Former HP CEO Léo Apotheker has claimed that if controversial British software company Autonomy's accounts were accurate, "I doubt that HP would have pursued an acquisition of Autonomy at all" – even as he admitted he himself hadn't read its quarterly results before getting HP to buy it in 2011.
Apotheker's bold claim, made in his witness statement to London's High Court, was robustly challenged in cross-examination by Robert Miles QC, barrister for former Autonomy CEO Mike Lynch.
"The most important thing was the synergies. That's what drove this acquisition wasn't it?" Miles asked the 65-year-old German executive, following up by asking if Apotheker had read all of Autonomy's financial statements before committing Hewlett Packard to buying the firm.
"Now you say you've read Autonomy's 2010 annual report, around this time," said Miles. "You did not read, did you, Autonomy's quarterly or half-yearly announcements in 2011."
"No I didn't," agreed Apotheker, explaining that he had paid closer attention to Autonomy's 2010 annual report, the last set of accounts it published before HP snapped it up in mid-2011.
Miles went for the jugular. "What you cared about was the technology and its potential, and [Autonomy]'s detailed trading results weren't of any great interest to you. That's one alternative. The other alternative was you were grossly negligent. Which is it?"
Apotheker sniffed, having been asked the civil court equivalent of "when did you stop beating your wife?" Gathering breath, he said: "Neither. You're not running HP all by yourself. People look at the numbers, people have followed the quarterly results, [they] told me they were perfectly within expectations. The reason why you read the annual report is the one you indicated early on, it contains notes."
"Isn't it extraordinary!" scoffed Miles. "You were looking to buy a company for $11bn and you didn't bother to read the most recent results!"
"I was told them," insisted Apotheker. "As I said, there were people inside HP who did a good job to keep me informed."
Miles kept needling Apotheker about how much scrutiny he had personally given Autonomy before the buyout. "You don't know that, you're saying that as something of an assumption... Why didn't you just read the reports?"
Apotheker, wilting under Miles' onslaught, lamely replied: "Maybe I didn't have time."
"Are you serious, Mr Apotheker?" said Miles, voice dripping with faux astonishment. "Are you saying at the time of an $11bn acquisition, you didn't have time?"
The German businessman tried to rally: "I'm running a $125bn company, minutes are precious!"
In his written witness statement, which was referred to during today's hearing, Apotheker explained more fully with reference to the 2010 Autonomy accounts:
My overall impression from reading the Annual Report was that Autonomy was a very successful, high-growth, high-margin pure software company... The information reported in the Annual Report was a key factor leading me to focus more on Autonomy as a potential acquisition target and ultimately to recommend that the Board authorize management to pursue negotiations looking to an acquisition.
The case continues. ®