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Autonomy was a 'pure-play software company', testifies former HP chief exec Léo Apotheker
And that's a quote from its 2010 accounts
Autonomy Trial Former HP top man Léo Apotheker told the High Court yesterday morning that Mike Lynch described Autonomy to him as a "pure-play software company".
HPE's case is that nobody from their side knew very much about Autonomy's hardware dealings before it bought the unstructured data analysis business for $11bn in 2011. Autonomy's annual report for 2010 (PDF) stated: "Autonomy is one of the very rare examples of a pure software model."
In a private meeting between the two chiefs in April 2011, Lynch "gave a very positive description of his company" with emphasis on Autonomy's 2010 full-year financial results, Apotheker testified.
Wearing a black suit and sky-blue tie, Apotheker described how he and Lynch talked about "databases, structured data, unstructured data, who was winning, who wasn't winning" in a "bit of a holistic 360-degree, high-level overview of the industry". Crucially, he also recalled that Lynch, while boasting about Autonomy's financial results, described the firm as "a pure-play software company".
Under cross-examination from Lynch's barrister, Robert Miles QC, Apotheker said Lynch "did briefly talk about the financial results of his company for 2010", adding again: "I believe he did mention that it was a very focused pure-play software company."
Miles's cross-examination of Apotheker yesterday focused on the notion that Apotheker had not properly looked at the detail of the Autonomy deal, a point that came to light during one tense exchange:
Miles: You think you can remember things when you're shown documents but don't remember when you don't have the documents.
Apotheker: I don't remember! It's almost 10 years, I really don't remember.
Miles: What I'm asking- we show you a lot of documents, you're able to answer questions when I show you a document, I'm asking how much you actually remember.
Apotheker: As much as I can and I'm under oath so I'll tell you whatever I remember.
Miles: It's not a criticism, it's a question.
Apotheker: I don't know how to answer that question.
Miles: Isn't it right by this stage unstructured data was at the centre of your plans?
Apotheker: No, that's not right. It was part of the plan.
Miles: Did you regard it as one of the core areas of the plan?
Apotheker: The plan, if you go through the speech I gave to investors, but if you would-
Miles: No, just answer my question, did you regard it as one of the core areas of your plan?
Apotheker: Among other areas.
In later exchanges Apotheker also took a swipe at HP's then-chief financial officer, Cathie Lesjak – and there is no love lost between the two after Lesjak's revelation in court that the chief exec had tried to fire her over her opposition to the Autonomy buyout.
Responding to Miles's questions about HP's accounting, Apotheker snidely remarked: "It appears that HP's forecasting capabilities and abilities under the CFO were not very good."
Miles seized on this: "Did you think she was deliberately changing numbers to say that there would have to be a downgrade in the earnings towards the end of the year?"
"Deliberately? No, I wouldn't go that far," hedged Apotheker, eventually conceding that had complained about her to HP's HR department – though he said he did not remember whether or not he had complained about Lesjak's bean-counting skills to HP's ethics department.
The 65-year-old German executive spent large parts of yesterday's cross-examination hunched forward in the witness box, a solicitor sitting next to him to help sort through the paper ring binders of evidence Miles was referring to. Up on the bench Mr Justice Hildyard, the judge, watched intently, supporting his chin on his hands as his two judicial assistants switched between watching Miles and Apotheker, like tennis spectators.
Apotheker is on the stand again today for HPE's barrister, Laurence Rabinowitz QC, to cross-examine him in turn. The case continues. ®