Is HP Right? Autonomy Salesperson Shares Internal Emails 92
Julie188 writes "You know how HP said it uncovered $5 billion worth of 'improper' revenue at Autonomy? One thing HP has accused Autonomy of doing is booking software-as-a-service contracts as software licensing deals. So how might that type of accounting work? A former Autonomy salesperson fighting a legal battle with HP says she's seen it happen firsthand. She's shared internal Autonomy emails and documents that show the details of one deal. '[While working for software company CA, Virginia Briody] had closed a four-year $1.22 million hosting/software-as-a-service deal with a customer, Pioneer Investments, and was paid her full commission, over $100,000, she says. Autonomy bought the software unit from CA on June 9, 2010, and Briody became an employee of Autonomy and Autonomy inherited the Pioneer contract. But there was an issue. Autonomy didn't acquire all the pieces called for in the original contract, Briody says. It didn't have a partnership with the hosting facility and it didn't gain from CA a critical piece of compliance software the customer needed, she says. Autonomy needed to find substitutions or Pioneer would cancel the contract, Briody says. So in the fall of 2010, she signed a new deal with Pioneer and walked away with a four-year, $1.859 million contract of which Autonomy execs considered $1.8 million as new revenue, she says.'"
Ah, the new Slashdot... (Score:3, Insightful)
Not news for nerds, stuff that doesn't matter unless you wear a $1000 suit.
Re:Ah, the new Slashdot... (Score:5, Funny)
Upward Mobility. (N) Defn: Momentum that may be gained by a swift kick in the assets.
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Suits like you don't belong here. You're the reason there are so many 'business intelegence' style ads. Go away.
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upward mobility
I always thought that "upward mobility" refers to what happens to you when you step on a land mine. But then again, I'm not American. :-)
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You're welcome.
We always remember to leave a few behind when we close up shop and move on to the next venue.
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upward mobility
That's ok, I've got an adjustable chair. It can go both up and down with the help of a lever.
Now, don't you have some TPS reports to file or something?
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Are there suits that cost less than $1000?
Re:Ah, the new Slashdot... (Score:5, Insightful)
Not news for nerds, stuff that doesn't matter unless you wear a $1000 suit.
Or unless you're thinking of starting a company, working in a startup, or otherwise deal with startups, which actually covers a lot of people on Slashdot.
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What if you actually start a company or work for a startup?
Is slashdot home for the Walter Mitty's among us?
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Of course, if you start a company you don't have time for anything else but sleep......
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I don't wear a suit, as much as I wear whatever happens to be closest to me when I wake up, but I care.
That being said, I work at HP, and its nice to know what's going on with the company so I can plan for any future Resume Generating Events.
Nice.... (Score:1)
but did they also pay the commission as a whole new sale?
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If they charged the customer twice then they should pay the commission twice. Not sure why the customer agreed to this deal, but it looks to me like the salesperson is getting shafted by HP.
I'm not a nerd anymore... (Score:5, Insightful)
I read TFS. I understood nothing. My nerd days must be over.
Looks like nowadays nerds are those who have deep insight into financial dirt. Forget computers, gadgetry, coding and Science Fiction. Welcome corporatism, financial stuff, sales and so on.
I'm a sad puppy now.
Re:I'm not a nerd anymore... (Score:5, Interesting)
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and cooking. Though you could file that under physics and chemistry too. Hrm...
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While the person who taught me how to cook without needing recipes was a physicist I would argue that it cooking is mostly chemistry.
I would classify vinegar cakes as sort of the ultimate nerd baking.
Re:I'm not a nerd anymore... (Score:4, Insightful)
I regard beer as the ultimate nerd baking.
Party at my place tonight! (Score:1)
Highlight of the evening: S'mores made with the help of Bunsen burners!
Be there! (Or I get your share of marshmallows and chocolate!)
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Oh no, an "I'm more nerdier than you" pissing match is breaking out on slashdot. It'll end up in a duel to the death via soldering irons.
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Neither do they venture into financial filth.
Re:I'm not a nerd anymore... (Score:5, Informative)
When they signed the original deal, they should book $25,416.66 as revenue for that month, and the remaining $1,194,583.34 as deferred revenue to be released over the remaining 47 months of the contract. Each month after that, you take $25,416.66 out of deferred revenue and put it in revenue.
When they signed the new deal, they should cancel whatever is left in deferred revenue, put the new deal in deferred revenue and take $38.729.16 per month to revenue.
If there are up-front expenses related to the deal, and sales commission may well be one of them, then they go to prepayments, and you expense them every month along with the released deferred revenue.
Re:I'm not a nerd anymore... (Score:5, Interesting)
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Jail, right. You must be joking. He said, she said, we said, they said...then it all just magically goes away,and a lot of attorneys get rich.
That's what would have happened if Autonomy duped some public office and got away with taxpayer's money. In this case they screwed over HP and as it stands now the former Autonomy executives don't have anybody to watch their back. I can bet that Deloitte, which is also sued by HP, will do their best to pin the blame on them.
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If this particular case does not turn out to be an insulated incident it can put a lot of people in jail.
Isolated incident, you can only use insulated in the same meaning as shielded. "I try to isolate/insulate/shield my team from management's whims" works but "a shielded incident" doesn't work so "an insulated incident" doesn't either. The reason is isolation is a state but insulation a barrier, so the opposite of isolated is widespread while the opposite of insulated is uninsulated. This has been a service announcement from your friendly neighborhood grammar Nazi.
Re:I'm not a nerd anymore... (Score:5, Interesting)
Because sometimes Autonomy did is the right choice. Companies can either book the revenue upfront or over the lifespan of the contract. No matter which one you pick it can be abused, so the trick is to pick the right one for the situation – which is a subjective accounting decision – and these subjective accounting decisions can be influenced by upper management.
Software Licensing Deals = buy. You buy a car from Ford and finance it though Ford. Ford books the car as a sale up front. This is
Software as Service = Lease: You lease a car for 36months from for and finance it though Ford. Ford books the revenue 1/36 each month.
The accounting issue is that the client was buying software (recognize profit today) and maintenance / support (recognize profit over a period of time) as a single, lump sum. Allocating costs between the 2 is subjective – and open to abuse.
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Oh wait I'm mistaken. Autonomy bought CA who had the original deal. Revenue streams incoming probably would transfer as present day value as part of purchase price.
This looks legit and isnt really double dipping. Autonomy just bought up a bunch of vendors and contracts to increase their backlog. HP should have checked this as part of their DD.
or just hired a bunch of ./ers to do dd for them. Duh.
Re:I'm not a nerd anymore... (Score:4, Interesting)
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Maybe Autonomy paid Deloitte more than HP . . . ?
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That's more or less one of the serious considerations here. http://www.economist.com/news/finance-and-economics/21567953-two-controversies-ensnare-big-four-accountable?fsrc=scn/tw/te/pe/accountable
Re:I'm not a nerd anymore... (Score:4, Insightful)
Re:I'm not a nerd anymore... (Score:4, Informative)
1) It's not obvious from TFA that they were double dipping revenues, but it seems that they improperly recognized revenue up front from a long term consultancy/SaaS contract. If HP, as potential acquirers, were to extrapolate the revenue based on Autonomy being a SaaS business, they would get a misleadingly high figure.
2) The board didn't have access to the numbers on a per-contract level, but they hired two public accounting firms that presumably did.
Boy, the courtroom is going to get crowded over this case. The accounting firms will be pulled in as well to defend their performances. As for the "whistle blower", she seems a tad greedy trying to get paid two fat commissions for the same deal.
Not so greedy (Score:3)
That's worse than the old Dilbert where the secretary "neglected" to put anyt
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Why is she greedy? She wants to get paid for doing her job!
- She signs a deal
- She gets paid, so presumably the deal signed is viewed as good one by her boss
- Her company gets bought by some morons, who do not do proper technical/dependency due diligence
- Through no fault of her own, her company cannot honour the original deal; the customer as well as she and her company are all in a jam
- She goes in and renegotiates a new deal for more money
Pay her, take her out to dinner, pay a vacation for her and her pa
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Seems reasonable that she get paid commissions twice, considering she had to make two sales. It's not her fault that Autonomy invalidated her first sale that was already in the can.
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Everything you said is exactly correct, I'd only like to add one thing:
Based on the first part of the summary, it sounds like they didn't defer very much to begin with. Booking a SaaS deal as a license means you can take a lot more revenue up front without deferring as much over the 4 years.
If they considered $1.8m out of $1.859 as new revenue, they were apparently only deferring $59k over 4 years (or thereabouts depending on the exact timing of the deals). That's a huge no-no, and should have been discover
Herbert Kornfeld Lives! (Score:3)
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HP got suckered.
Just Desserts... They've been suckering their customers since at least Carly Fiorina...
They used to be a tech research titan, now they sell printer ink.
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Peter Burrows's 2003 biography, "Backfire: Carly Fiorina's High-Stakes Battle for the Soul of Hewlett-Packard," about the former Hewlett-Packard czarina, included background and commentary from Fiorina's first husband, Todd Bartlem. Bartlem comes off as a bitter, wounded, and dare I say truthful commenter on Fiorina's hard-won transformation from world's peppiest receptionist to CEO of a prestigious multinational corporation.
Bartlem describes Fiorina worshiping the book "Dress for Success" like a "Bible," a
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It is sad.
I've always used HP calculators, my dad tought me RPN, and that's all I've ever used. When I was in school in the 80's, I paid $400 for an HP41 built in Corvallis. When the keys stopped working, I carefully opened the case, cleaned the contacts with a little Carbon Tet and put it back together. Where can you buy a decent RPN device today? Nowhere.
I'm not a hardware guy so I don't use HP scopes (do they even still make bench equipment?), but for my current job with the DoD, I insisted they buy me a
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I'm not a hardware guy so I don't use HP scopes (do they even still make bench equipment?)
HP's spun off their scientific instruments, electronic test equipment, and a number of things, into Agilent Technologies about 20 years ago. Agilent still makes bench equipment, to the point that I have some pieces of HP/Agilent equipment that are identical except for the corporate logo on them (including having the same model number).
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The biggest problem was that HP didn't spin off their Corvallis calculator group to Agilent. HP management never understood the fact that HP calculators were predominantly used by the same technical customers as their other instruments - hence HP-IB, HP-IL calculator interfaces, the huge popularity of their EE software packs, etc - and shouldn't have been left to rot with the office equipment business.
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Where can you buy a decent RPN device today?
You buy an older HP calculator on eBay of course.
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Where can you buy a decent RPN device today? Nowhere.
Well, nowhere except Amazon I guess. Or TigerDirect, or Best Buy, or whatever ... I have one of these [amazon.com] and it works great. I don't have cause to do a lot of number-crunching most days anymore, though, and the AAA batteries on it tend to run out even after I haven't been using it, so more often than not I end up using an HP48 emulator [google.com] on my Android phone. I do like the real buttons on the standalone calculator, though, so if I had more cause to calculate I'd use that.
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Booking as the wrong kind of deal WOULD potentially be an underhanded way of recognizing revenue improperly - claiming "We got $120,000 today" when in fact what you really got was an agreement to receive $10,000 a month for 12 months.
Well, state lotteries always seem to be able to get away with this scheme.
HP's Own Creative Accounting (Score:2)
Take HP Loses in Tax Court to IRS [accountingtoday.com] and HP Grabs $14.5B Job Creation Tax Break As It Celebrates Layoffs [techdirt.com], for instance. :-)
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Wait a second, they just move 14.5 billion cash from their non-US into US operations. They get some tax breaks onto these 14.5 billions, I assume. But they do NOT get 14 billions as a subsidy.
And before you cry like a baby about 14 billions, think about their expenditures just for wages: 300k employees @ 50k is 15000k^2 dollars. That's 15 billion dollars in wages every fucking single year. Now, these 50k are a guesstimate; look up their annual report and the figure will be slightly different. Not in a diffe
Pre-Buy Depth Sampling (Score:2)
If you are under a time pressure, then generally you'll randomly select some specimens from the summary list of income sources (contracts) and send auditors to inspect those specimens in detail. That way you are likely to catch a "bad batch". It's not perfect, but a pretty good way if you can't check them all thoroughly.
I suspect HP only did summary auditing.
The banks should have done depth sampling with their bundled mortgages and perhaps saved the world from a global recession.
SOP (Score:2)
Booking top line revenue at the time they get wet sigs is standard operating procedure for I don't know how long...30+ yrs.
CA and HP in Same Direction (Score:1)
When I saw "CA" in the text, I knew there must be some shenanigans.
Isn't this the same kind of stuff that got Sanjay Kumar of CA in prison?
Well they can't blame this one on him. He may soon have some new cellmates to talk old times.