Re: HPE going after Mike Lynch's estate

On 9/18/2024 8:40 AM, Simon Clubley wrote:

On 2024-09-17, Arne Vajhøj <arne@vajhoej.dk> wrote:

Lynch, who was on Friday waiting to find out if he could be extradited
to the US to face a separate criminal trial, was found to have defrauded
HP by manipulating Autonomy?s accounts to inflate the value of the
company. He has always denied the accusation and said on Friday that he
would appeal.

 This is the same legal system that said hundreds of innocent people were
ripping off the Post Office and then proceeded to destroy their lives.
Since the details of that became fully public, my opinion of our legal
system in related matters has taken a massive nosedive.

Maybe.
But you should expect the judges to have a much better understanding
of century old principles for buying and selling goods than of
how poor quality software can be.

?Claimants have substantially succeeded in their claims in this
proceeding,? said Mr Justice Hildyard, after a 93-day trial during which
28,000 documents were considered as evidence..
>
He said the damages were likely to be significantly less than the $5bn
claimed by Hewlett-Packard (HP) and successor companies, while he also
cast doubt on the reliability of some of the US firm?s witnesses.
>
However, he ruled that HP had been induced into overpaying for the
takeover, due to fraud perpetrated by Lynch and Autonomy?s former
finance director, Sushovan Hussain, who is in jail in the US after being
found guilty of fraud relating to the same deal .

 Annoying how the fact that HP never even completed the expected due
diligence before purchase doesn't enter into this decision.

That is not relevant when there is fraud.

Also, the numbers don't add up. From:
 https://www.cio.com/article/304397/the-hp-autonomy-lawsuit-timeline-of-an-ma-disaster.html
 the claim is that Autonomy overstated its revenue by US$700 million yet
HP did a multi-billion USD writedown. HP massively overpaid for Autonomy
and are trying to deflect blame away from their massive screwup in both
overpaying and not even waiting for the due diligence to be completed.
 How do you get from a $700 million fraud claim to a $5 billion+ writedown ?

HP write down was actually 8.8 B$ - and they claim 5 B$
(elsewhere it is stated as 4 B$, the judge could decide on a
significant lower amount). So HP is really saying that
they lost 5/4/X B$ due to fraud in the numbers they got and lost
3.8/4.8/8.8-X B$ due to overpaying even if the numbers had been correct.
But back to the main question.
The 700 M$ and 5 B$ is not the same type of number.
You need to distinguish between:
revenue = sale
profit = profit margin * revenue
value = accumulated expected profit from now to eternity discounted with interest rate
There is nothing surprising in that a delta value is bigger than
a delta revenue.
It would be surprising if it was not.
Arne