Mike Lynch Departs Autonomy Amid Huge HP Cuts

The co-founder and chief executive of unstructured data specialist Autonomy has left the company as parent group Hewlett-Packard prepares a massive redundancy program.

Dr Mike Lynch has been the chief executive of HP’s Autonomy division, ever since the Cambridge-based company he founded back in 1996 was sold to HP in August last year for $10.3bn (£6.6bn).

Controversial Move

The deal was controversial at the time and it proved to be one of the last decisions of HP’s former CEO, Leo Apotheker, who was ousted soon after the deal was announced.

Many industry analysts felt that HP grossly overpaid for the British firm. Indeed, Oracle chief executive Larry Ellison also criticised the purchase price as being “absurdly high”. Ellison claimed that Autonomy shopped itself to Oracle ahead of the HP acquisition, but was turned down because it was overpriced.

The departure of Cambridge University graduate Dr Lynch, was unexpected, and there was none of the usual accompanying warm words from HP itself. Indeed, an HP spokesman simply referred TechWeek Europe to HP’s earnings statement regarding the matter.

“To help improve Autonomy’s performance, Bill Veghte, HP’s chief strategy officer and executive vice president of HP Software, will step in to lead Autonomy,” said HP.

“Veghte is an experienced software leader who will help develop the right processes and discipline to scale Autonomy and fulfill its promise,” HP added. “Mike Lynch, Autonomy’s founder and executive vice president for Information Management, will leave HP after a transition period. The market and competitive positioning for Autonomy remain strong, particularly in cloud offerings.”

Dr Lynch is understood to have personally made $800m (£511 million) from the sale of his company to HP,  and it is reported that he is also expected to receive a payout when he leaves.

You can find the list of other execs who have quit the company since the HP takeover at our partner website ChannelBiz.

Poor Performance?

It has been suggested in the Daily Telegraph that HP has not been satisfied with Autonomy’s performance of late.

The newspaper quoted HP as saying that Autonomy had failed to match expectations over the last quarter as it struggled to close deals.

“It is not the product. It’s not the market. It’s not the competition. This is classic entrepreneurial company scaling challenges – it’s a whole different ball game,” Meg Whitman, chief executive of the US computer giant was quoted as saying.

“License revenue was disappointing, sales execution was a challenge and big deals were taking longer to close,” at Autonomy, Cathie Lesjak, HP’s finance director, reportedly told analysts during the earning call.

And it seems that Autonomy has been steadily losing senior management of late, with the Teelgraph quoting sources as saying that around a fifth of Autonomy’s management team had left since HP bought the company.

Dr Lynch will leave after what HP called a “transition period”.

Job Cull

The departure of Dr Lynch comes amid the long-awaited confirmation from HP on Wednesday that it will axe about 27,000 full-time jobs – or about 8 percent of its workforce of 349,600 – over the next two years.

Many of those cuts – possibly 15,000 – will come at the company’s Texas-based HP Enterprise Services division, formerly known as Electronic Data Systems, or EDS. However HP confirmed to Techweek Europe that British jobs could be at risk as well.

The company does not disclose the size of its British workforce.

“We have not yet announced specific plans with regards to specific locations,” HP told Techweek Europe via email, before pointing that out that the cuts will hit most regions.

“We do expect the workforce reduction to impact just about every business and region,” said HP. “Beyond this, unfortunately, we do not have anything else to share at this time.”

How much do you know about cloud computing? Try our quiz!