Oracle has been plunged into a word war against the UK software analytics specialist Autonomy and HP. HP announced last month it will acquire Autonomy for $10.3 billion, at a price that includes a huge 78 percent premium or overpriced compared to the Autonomy trading day stock market value.
Oracle CEO Larry Ellison spared no words in connection to the acquisition. Earlier this month at the Oracle’s earning announcement, Ellison said that HP paid too much for Autonomy.
“Autonomy was traded to us,” Ellison said. “We looked at the price and found out that it is incredibly high.”
Autonomy CEO Mike Lynch knocked Ellison’s rhetoric statement and said that he has poor understanding of unclassified knowledge and about the business of Autonomy.
Lynch also denied allegations that Autonomy would never be offered for sale to Oracle and didn’t meet with any of the top executives of Oracle. However, he didn’t deny individual investment bankers would have been able to propose autonomy for buying Oracle.
Oracle fueled the Autonomy argument today by publishing a newsletter on its website, where it provides detailed information about the meeting. The newsletter said Lynch met with Oracle Vice President Mark Hurd and Oracle’s head of MA, Douglas Kehring, in April, and was also involved in a meeting with Silicon Valley’s famous investment banker, Frank Quattrone.
Oracle refused to purchase Autonomy after the meeting, due to its then $6 billion market valuation, which was too high, in Oracle’s view.
Here’s is an abstract from the newsletter,
“After HP agreed to acquire Autonomy for over $11.7 billion dollars, Oracle commented that Autonomy had been ‘shopped’ to Oracle as well, but Oracle wasn’t interested because the price was way too high. Mike Lynch, Autonomy CEO, then publically denied that his company had been shopped to Oracle. Specifically, Mr. Lynch said, “If some bank happened to come with us on a list, which is nothing to do with us.” Mr. Lynch then accused of Oracle of being ‘inaccurate.’ Either Mr. Lynch has a very poor memory or he’s lying. ‘Some bank’ did not just happen to come to Oracle with Autonomy ‘on a list.’ The truth is that Mr. Lynch came to Oracle, along with his investment banker, Frank Quattrone, and met with Oracle’s head of MA, Douglas Kehring and Oracle President Mark Hurd at 11 am on April 1, 2011.
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.”
Soon after the statement, Lynch admitted he did meet with Hurd but only to discuss on technical issues in the software.
Big Challenges for HP Ahead
HP last month announced the Autonomy deal and its plan to spin off its PC manufacturing business. And last week, the company fired Hurd’s successor Leo Apotheker, replacing him with Former eBay CEO Meg Whitman. And at the doors of another economic downturn, along with increased competition from Oracle and other industry giants, the challenges for Whitman are huge. HP’s profit margin is sinking in key areas of its business, and its decision to shut down PC business will further pressure the company to sustain its profitability.