From They would.P., a mistake That Seems to get over All

1. From They would.P., a mistake That Seems to get over All The dubious title of worst corporate deal ever had looked to be held in perpetuity by AOL's acquisition of Time Warner in 2000, a deal that came to explain the folly of the Internet bubble. It ruined shareholder value, finished careers and almost capsized the surviving AOL Time Warner. Enlarge This Image Ryan Anson/Bloomberg news , via Getty Pictures Leo Apotheker, ceo of HewlettPackard, with Catherine A. Lesjak, its chief financial officer, at a gathering in March 2011. Ms. Lesjak strongly opposed the acquisition of Autonomy. Increase Portfolio HewlettPackard Company Head to your Portfolio " The deal was considered so bad, and this kind of object lesson for a generation of deal makers and corporate executives, that it looked likely not to be repeated, rivaled or surpassed. Until now. Hewlett-Packard's acquisition last year of the British pc software maker Autonomy for $11.1 billion "may be worse than Time Warner," Toni Sacconaghi, the respected technology analyst at Sanford C. Bernstein, told me, a view which was echoed this week by several H.P. analysts, rivals and disgruntled investors. A week ago, H.P. stunned investors still reeling from more than a year of management upheavals, corporate blunders and disappointing earnings when it said it was writing down $8.8 billion of its own acquisition of Autonomy, in effect admitting the company was worth an astonishing 79 per cent less than H.P. had paid for it. And it attributed significantly more than $5 billion of the write off to what it called a "willful attempt on behalf of certain former Autonomy workers to inflate the underlying financial metrics of the company to be able to mislead investors and potential buyers," adding, "These misrepresentations and lack of disclosure badly impacted H.P. management's ability to fairly value Autonomy at the period of the deal." In an unusually aggressive public relations counterattack, Autonomy's creator, Michael Lynch, a Cambridge-educated Ph.D., has denied the charges and accused Hewlett Packard of mismanaging the acquisition. H.P. asked Mr. Lynch to step aside last May after Autonomy's results fell way short of expectations. But others say the problem of fraud, although it might offer a face-saving reason for at least some of H.P.'s tremendous write down, shouldn't veil the fact the deal was wildly overpriced from the beginning, that at least some individuals at Hewlett-Packard recognized that, and that H.P.'s chairman, Ray Lane, and also the board that approved the deal ought to be held accountable. A Hewlett-Packard spokesman said in a statement: "H.P.'s board of directors, like H.P. management and deal team, had no reason to believe that Autonomy's audited financial statements were erroneous and that its financial performance was materially overstated. It goes without saying they are disappointed that a lot of the information they relied upon appears to have been manipulated or wrong." Nevertheless, the tremendous write down as well as the unsatisfactory results at Autonomy, combined with several other missteps, have led to the widespread awareness that H.P., once one of the country's most respected companies, has lost its way.