Mike Lynch to leave HP as Autonomy sales tumble

Mike Lynch, founder of information management vendor Autonomy, is to leave Hewlett Packard after a "very disappointing" quarter for the company, which HP acquired last year.

"Autonomy had a very disappointing license revenue quarter, with a significant decline year-over-year resulting in a shortfall to our expectations," HP CEO Meg Whitman told investment analysts yesterday.

"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," she revealed. "Mike Lynch, Autonomy’s founder and executive vice president for information management, will leave HP after a transition period."

She attributed Autonomy’s poor performance to ‘scaling challenges’. "When you try to go from $40 million to $400 million to $1 billion to $2 billion, it’s a whole different ballgame," she said. "We need to put in some sales [operations] processes, we need to put in better interface into HP in terms of how Autonomy interfaces with our services business as well as our servers, storage and networking business, and we need a new organisational structure to support a $1 billion-plus company."

Whitman insisted, however, that "the market and competitive position for Autonomy remains strong, particularly in [its] cloud offering, and we have been flooded with a number of big deal leads."

"I think this was a very smart acquisition," she said. "I feel great about the product, and we have absolutely hit one of the scenes that is changing most in the technology business. The opportunity around big data and analytics is fantastic and it can flow right across all of our businesses."

HP reported a 3% decline in revenue for the first quarter of the financial year, down to $30.7 billion. Net income dropped 31% year-on-year to $1.6 billion.

Whitman confirmed that the company will be cutting 27,000 jobs – 8% of its workforce – by the end 2014. Alongside cost cutting initatives such as simplifying its product and platform portfolios, this will save the company between $3 billion and $3.5 billion a year from 2014 onwards, she said.

"The majority [of these savings] will be reinvested using a disciplined, data-driven process to prioritise organic opportunities across the business," Whitman said. ‘We’ll be investing to drive leadership in the three strategic pillars of cloud, security and information management."

Lynch founded Autonomy in 1996. By the time it was acquired by HP for $11 billion in October 2011, the company had annual revenues of around $900 million.

Much of this growth was driven through acquisitions, notably those of search technology vendor Verity in 2005, email archiving supplier Zantaz in 2007 and content management provider Interwoven in 2009.

Since the acquisition by HP, rivals have become more openly critical of this strategy. Speaking to Information Age last month, Raj Verma, marketing VP for middleware vendor TIBCO said: "They have acquired companies that really have nothing in common. They have put that together and sold it for ungodly sums of money."

Nick Patience, director of product strategy at legal document management vendor Recommind and co-founder of analyst company The 451 Group, tweeted: "Now the man behind the curtain has gone at Autonomy, who will convince folks its offerings are real?"

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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