Hp and Autonomy–I feel a blog post coming on

by Andrew Watson on 22 November 2012

It’s been a hectic few months and I’ve got out of the habit of blogging. There’s is much IP news around and some good informed debate (more of the former than the latter) but the Hp and Autonomy alleged accounting scandal caught my eye this week and seems worthy of debate. Noodling on the facts, here is what this appears to be about:

  • Hp announces it will buy Autonomy as a supposed central plank of the future strategy put forward by Leo Apotheker
  • It then disposes of Mr Apotheker, only months into his reign
  • But continues to buy Autonomy for a whopping $12bn
  • Apparently 15 different advisory firms involved in the transaction failed to spot the accounting “irregularity”–combined fees earned likely some £600-750m–anyone feeling uncomfortable?
  • And then, somewhat clumsily, loses the entire Autonomy management team (how can that be–did they think that the company would run by itself, when so much of Autonomy’s essence was its know how and trade secrecy?)
  • Then puts its own head of strategy in charge
  • And ends up 6 months later taking an $8.8bn (73%) write down against an asset acquired only 14 months beforehand.

Now that all takes some thinking through.

It is probable that Mr Apotheker’s original strategy saw Autonomy as a key asset in his strategic thinking (it would be hard to justify such a price premium otherwise) and it is also possible/probable that Autonomy’s big data solutions remained central to Hp’s strategy under the consumer focused Meg Whitman. It’s also possible/probable that withdrawing from the acquisition after Mr Apotheker’s demise would have been costly in terms of cash ( break fee and paying Autonomy’s adviser fees) and reputation (don’t ever sell to Hp, they can’t be relied on to close and change strategy like they change their underpants).

But at the heart of this are three interesting questions:

  • How was Autonomy valued? in the World of Motorola Mobile being worth $12bn to Google, Meraki being worth $1.2bn to Cisco and Instagram being worth $1bn to Facebook, true fundamental value cannot apply so one has, I think, to justify the  intangible  merger premium by a 1+1=4 logic.
  • What was the merger premium paid?
  • Was Autonomy a strategic acquisition in the first place, and if  it is no longer–does that justify the $8.8bn write down?

Mike Lynch was very impressive at the BVCA summit a few weeks ago, explaining what it takes to build a great company. I would also expect him to be a dynamic and charismatic negotiator. I’m trying to imagine the scene where he first persuades Apotheker to place a $12bn value on Autonomy, and then the scene revisted where Apotheker”s successor comes back in to say that Hp may want to change their minds. No mercy!

I’ll noodle on those three questions over the next few hours and attempt to answer them tomorrow. To this point its hard not to be more in Mike’s camp that “Hp are looking for scapegoats, and I don’t intend to be one…”.

 

 

 

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Brands that deserve to succeed, Mr Olympic Sausage

by Andrew Watson on 25 July 2012

Thanks for the pointer to this article from the lovely Sam Funnell at ARM. Mr Olympic Sausage sounds like one of those names you come up with for your porn star name by combining the name of your first pet with your mother’s maiden name. In my case Wyn Bolton (or, with the right emphasis, Wyn,after the great Wyn “the Leap” Davies) Bolt-on. Made me laugh anyway.

But no this Mr Olympic Sausage is “a butcher in a town hosting sailing events who had to remove a sign showing the Olympic rings made from sausages.”

Now I guess I would understand if I was Coca-Cola that if I’d paid close on $1bn to sponsor the Games over 4 years, I’d be justifiably miffed if Pepsi ads were then shown all over the main stadium and David Beckham dropped his shorts, a la Niklas Bendtner, and they were advertising the other cola.

But to apply this to Mr Olympic Sausage is just silly. We all know that the Games are now so huge that sponsors need to be attracted so that they can be financially viable. Though whether they need to turn so large a profit and be surrounded by corporate smoothing does somewhat offend my sense of what they are really all about.

But where Mr Olympic Sausage is concerned, what happened to common sense, what happened to that English sense of fair play and quirkiness, what happened to Boris’ wiff waff spirit? Do we have to kill all things that make life sweet and fun and are entirely within the spirit of the Games, just so that the Games’ official sausage sponsor (even if there is one) can say with certainty that they got their money’s worth.

As a former one, I smell the work of fundamentalist lawyers. This breed is precise to 28 decimal places, shows an alarming absence of common sense or commercial sense, becomes the deal rather than just writing it down, and, worse still, charges one arm and one leg for the displeasure and has no sense of fun or joy.  And can quote word for word clause 28.1.1, sub section (ii), sub clause (b) of the 130,000 word sponsorship agreement with the Olympics sausage partner which says “No person other than the Official Sausage Partner can show, demonstrate, hint at or in any way have an association with sausages, on pain of being excruciatingly killed by having to spend 2 full weeks in a locked room full of lawyers……….” Aaaaaaaaaaaaaaaaaaaaaaargh!.

Common sense is not so common. Is it?

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If for no other reason than she has taken the job, one of the most challenging in the tech world right now, whilst heavily pregnant, and has told her (inevitably) male and (disappointingly)  female doubters, that she is going to do her job and her motherhood her way.

We like this woman already. Though there is a half a sniff that she could be a strategic weapon for Google to make sure Yahoo remains in friendly hands. Like ex-Microsofter,  Stephen Elop in Nokia, it can’t harm to have friends in the right places of some of the war’s more tactical assets.  Don’t shout cynic, instead read the Art of War.

I’m liking this series.

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Slashdot reports today that Google has come up with a really smart way of avoiding all of these pesky and irritating patent fights it is in right now.

Referencing an article on All Things D, Google GC Kent Walker comments:

“While collaborative [Standards Setting Organizations (SSOs)] play an important part in the overall standard setting system, and are particularly prominent in industries such as telecommunications, they are not the only source of standards. Indeed, many of the same interoperability benefits that the FTC and others have touted in the SSO context also occur when one firm publishes information about an otherwise proprietary standard and other firms then independently decide (whether by choice or of necessity) to make complementary investments to support that standard in their products. … Because proprietary or de facto standards can have just as important effects on consumer welfare, the Committee’s concern regarding the abuse of SEPs should encompass them as well. “

Ahem!! Read that back again and ask why that suggestion doesn’t drive a very large coach and a herd of horses (it is a herd of horses isn’t it?) through the entire patent system.

It is often said that in any patent portfolio, there will be around 5% that have real commercial value (why this makes sense to follow in later posts), and, with Mr Walker’s suggestion, of this 5% of heavy investment, it is fair that those that get really popular are deemed to be de facto Standard essential when consumers decide they really like them. You’d have to be quite desperate for that to be part of a serious set of arguments, don’t you think?

After the abuse of the Standards system (well maybe manipulation is a better word) by the 2 and 3G member-only clubs, is it fair then for one of those that has paid out most in the Smartphone wars in club membership fees to have to deem its most valuable patents as available on FRAND terms to another company who has far from played by the rules? Would it also be fair to make MSFT play by the same rules after 13 years of IP investment has put it into the position of being able to offer a total indemnity to its users and to exercise a significant strategic and competitive advantage?

Whoever may be listening to Kent Walker, don’t. He is GC of a company which has been less than honest with Android OS licensees. Suffer little Google for a bad set of consciously-taken IP decisions, in particular (a) to indemnify or not, you chose not (b) to buy Nortel or not, you chose a quirky not (c) to buy MMI without too much investigation of whether its patents were already out-licensed and on what terms.

Nice search engine, lots of revenues, wrong IP strategy, desperate submission.

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If you’re not from the UK, you may not be familiar with the weird combination of part footballer, part philosopher, part hooligan, part socialist, part nutcase, all conundrum that is Joey Barton. More on Joey in later posts, he may yet feature in this series but I’ve not yet made up my mind as to whether to like and sympathise with him or view him as an advanced Neanderthal that represents all things bad about UK society.

For the purposes of this post, here is Joey in worst form. Joey’s explanation for his assault on Sergio Aguero,  claimed on Twitter, was that his violent actions were a cynical ploy to provoke a City player to be sent off.  He insisted via Twitter that he had “not lost his head but that a team-mate suggested I should try to take one of theirs with me”.

Make your own mind up on that one. If you’re still unsure, watch Joey’s face as he knees Aguero in the back and ask whether he was keeping his head at the time or whether it was not just 100% malice.

And the relevance to Bashar Al-Assad? Well, if he ever takes to Twitter, his current actions and those to follow in the next few weeks will be explained with something along the same lines. He is going, without a doubt, so he decides to “take a few with him”.

It will not be a pleasant end, and some lucky Syrian is going to be the one that finds him cowering in some bunker, humiliated and looking a little pale. He may try the trick of one of Gaddafi’s sons and claim he’s a sheep herder.  Maybe he’ll try the “leave me alone, I’ve been a good leader” trick tried by Gaddafi himself, but all will fail and some lucky Syrian will have the privilege of bringing his cowardly and despotic reign to an end. Although he will not be around to see it, the bodies of himself and anyone associated with him will be then shown publicly until buried at sea or out in the desert.

Either way Bashar, you’re going. You have a very short window in which to retain a scrap of dignity, and maybe your life, rather than taking thousands with you. Straight choice, but you cannot win.

He is now being consigned to history. Wonder who’s next?

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Ryanair I forgive you..I was wrong….

by Andrew Watson on 16 July 2012

Ha! Fooled you. No of course I don’t. Travel chaos today as my host for a weekend in Bergerac (he will remain nameless) got us to the airport on what he thought was time to find our FlyBe 13.15 flight sitting on the tarmac ready to leave, at 13.15. Oops.

Imagine though the joy of knowing that Ryanair was there to save me. You know, give them their dues, their one, very full flight to Dordogne has opened up the region for tons of tourists to visit this lovely part of South West France, but that’s enough of being nice. The person behind the desk was actually quite apologetic as he told us that the next flight would cost £268 each, and, here is the rub, £100 for my suitcase. He was so embarrassed that he gave us priority boarding out of sympathy. I hope I don’t get him into trouble but it actually showed that, given a touch of humanity, Ryanair could just evolve into a half decent customer experience.

Despots around the world are falling fast. Al-Assad is on his last legs and will be planning his escape route if he has any sense. Diamond is gone. Blatter has become such an embarassment to the Swiss he’s planning his retirement. Micheal o Leary, start saying goodbye. You know it’s right to go. You can start to travel..make sure you get speedy boarding, and, if using Ryanair, make sure you print out your boarding pass.

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Sepp Blatter did his already junk-bond status reputation further damage with his remarkable remarks to the Joao Havalange and son in law scandal this week.

http://www.guardian.co.uk/football/2012/jul/12/sepp-blatter-joao-havelange-fifa

Try this one and at first glance the “not my fault” explanation feels semi plausible:

“You can’t judge the past on the basis of today’s standards,” he said. “Otherwise it would end up with moral justice.”

Then you think about, having just heard his admission that he is P1 and that he personally authorised a payment from FiFA to the Swiss courts to cover up the case against Mr Havalange and think….ay? You are kidding though. I thought he was a twat, now he’s showing himself to be a total twat!

Calls to step down are like calls to stop bombing and slaughtering his people to Bassar Al-Assad. Only force will stop these despots, words mean nothing and with cronies and zero governance, all they can do is lash out at their critics and hope that they can silence the most damaging ones, and Joey Barton like, try to take a few with them as they go down.

It took Mervyn King’s intervention to extract Diamond Bob’s ugly moral code. Who is the Mervyn equivalent here who can step in and take Sepp out before he drags football’s reputation to increasingly lower levels.

A game I love, a man that we all hate.

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Small rumour-more Facebook buying

by Andrew Watson on 5 July 2012

Apparently Facebook has been on at least two other recent patent splurges. We are digging.

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To ARM’s Chief IP Counsel Sam Funnell (Ben pronouced it Funnel but I thought the emphasis is on the second syllable).

Sitting next to Sherry Knowles (ex GSK head of IP)  and hearing Sherry say that she “totally disagrees” with you is not easy territory. But Sam is a true Brit. Her comment that

” in Arm, I am responsible for IP, but that my board and management are responsible for Arm’s intellectual, human and relationship capital”

 gets the Tangible IP award for the most sophisticated comment at IPBC, and maybe of 2012.

No wonder Arm has now shipped more microprocessors than Intel. A perfect IP model. Would love to run our benchmark on them.

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Another very urgent change at the top needed before reputation and brand collapse. Go now Bob and show some leadership. You take your bonuses and by doing so misread entirely the public mood. Then when bad things happen you don’t show leadership by stepping aside and taking the blame onto your shoulders. You are not the man to take Barclays forward. Bye.

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