Friday, September 30, 2011

Larry, Please Buy Autonomy

The Akbas Post has already informed public about Autonomy having heavily shopped itself around for two years back in August. Larry Ellison of Oracle posted Autonomy's Information Memorandum on its website.

Autonomy CEO Lynch is in big trouble with London SE and HP' $11.7 B deal could be in jeopardy. And of course, following Megg Whitman's appointment, HP soap opera continues!

Larry Ellison has built a reputation for buying companies at bargain prices; His spat with Mike Lynch is brilliantly calculated in an attempt to kill HP/Autonomy deal by having authorities heavily scrutinize the deal and any past transaction attempts that were kept from the public by Autonomy management, for which they could go to jail or be banned from executive posts in public companies. 

Most of deals come in with mult-year earnouts and stay-on bonuses for key executives, this alone could kill the deal itself. If the deal is dead, Autonomy's shares would tank and Ellison would then conveniently make his move, as he has done in the past.

According to Financial Times this morning, Autonomy, Oracle and a leading technology banker fell into a war of words over Hewlett-Packard’s high-priced acquisition of the British software company this week.

Larry Ellison, Oracle’s rambunctious chief executive, and Mike Lynch, Autonomy’s forthright head, have accused each other of lying about whether Autonomy was “shopped” to Oracle before agreeing its $11bn sale to HP, at a premium of more than 60 per cent.

Although Mr Lynch has borne the brunt of Mr Ellison’s assault this week, the Oracle chief’s real target is its increasingly bitter rival, HP. Mr Ellison has previously lambasted the HP board for discharging chief executive Mark Hurd last year, who is now Oracle’s president.

The dispute could also raise serious questions for Autonomy with the London Stock Exchange, which requires listed companies to inform shareholders about any serious takeover talks.

At the source of the spat is a presentation given to Oracle management by Frank Quattrone, whose boutique Qatalyst acted as adviser both to Autonomy and in Motorola’s $12.5bn sale to Google, the year’s two biggest tech deals.

“Autonomy was shopped to us,” Mr Ellison told analysts on an Oracle earnings call last week. “We looked at the price and thought it was absurdly high.”

Mr Lynch denied this in an interview with the Wall Street Journal, saying: “If some bank happened to come with us on a list, that is nothing to do with us.”

He went on to reprise his familiar critique of Oracle’s database products, which compete with Autonomy’s “unstructured data” management software.

In its typical splashy style, Oracle hit back at Mr Lynch by issuing a press release late on Wednesday night, accusing the Autonomy chief of telling “another whopper” by failing to mention his April meeting with Mr Hurd and Doug Kehring, Oracle’s head of M&A, in April.

“Either Mr Lynch has a very poor memory or he’s lying,” Oracle said. “After listening to Mr Lynch’s PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr Kehring and Mr Hurd told Mr Lynch that with a current market value of $6bn, Autonomy was already extremely overpriced.”
Mr Lynch immediately returned fire, insisting the meeting was nothing more than a “lively discussion about database technologies”.

“Frank was not engaged by Autonomy and there was no process running. The company was not for sale,” Mr Lynch said.

Oracle then took the unusual step of publishing the full slide deck from Mr Quattrone’s presentation at, which it said was made with Mr Lynch present.

“After the sales pitch was over, Oracle refused to make an offer because Autonomy’s current market value of $6bn was way too high,” Oracle reiterated.

This prompted Mr Quattrone to wade in with a new twist in the tale.

“The slides Oracle posted publicly were sent by me to Mark Hurd in January, were prepared by Qatalyst and were for the purpose of our independently pitching Autonomy as an idea to Oracle,” Mr Quattrone said. “These slides were not used in our April meeting with Mark and Doug.”

HP said in a regulatory filing that the Autonomy deal could close as soon as Monday if it gets required acceptances from holders representing 75 per cent of Autonomy’s stock.

Thursday, September 22, 2011

Crisis Unfolds at H-P Over CEO Following Our Blogpost - Committing Corporate Suicide HP

The stock has been down more than 50% in the last 11 months under Leo's leadership. I am not surprised at all that HP board is finally firing Leo as I had published a blog post a month ago - Committing Corporate Suicide HP holding the board accountable for not only Leo's appointment but also Carly's and Hurd's.

The shareholder dissatisfaction is so high that firing Leo or bringing in Meg Whitman will not turn things around but things could improve from now on with almost any CEO I must admit.  I would also change all board members who should be held accountable for the wrong CEO appointments three times in a row.

Another suggestion I'd have is to get out of the Autonomy deal at whatever cost possible as they had offered ridiculously high premium for a company that was shopping itself around for years.

Saturday, September 03, 2011

Eli Lilly in Partnership Talks with Turkish Drug Maker

According to a report in WSJ, Eli Lilly & Co. is in talks to form a partnership with, and potentially invest in, Turkish generic-drug company Mustafa Nevzat İlac Sanayii AS, according to people familiar with the matter, marking the latest effort by a big Western multinational to tap emerging markets for growth.

The talks are at an early stage and it is possible no deal will result. Indeed, industry watchers say there are a number of big Western drug companies that could have an interest in MN Pharmaceuticals, as the company is also known.

Though the talks with Lilly are currently focused only on a minority investment, control of the Turkish company also could ultimately be in play given that strategic buyers often prefer that course. MN is worth about $1 billion, one of the people said.

A spokesman for Lilly didn't immediately comment. An MN representative couldn't be reached.

Drug companies and other multinationals in the U.S. and Europe are increasingly looking east and south for an antidote to Western markets where economic growth is sluggish and which are already saturated with their products.

Last October, Pfizer Inc. agreed to pay 400 million reals ($250 million) for a 40% stake in Brazilian generic-drug maker Laboratório Teuto Brasiliero and the option to buy the rest of the company later. Spirits giant Diageo PLC in February agreed to acquire Turkish spirits company Mey Içki Sanayi ve Ticaret AS for $2.1 billion.

Turkey is a particularly attractive emerging market, given its large and increasingly wealthy population of more than 70 million people. Apart from a slowdown resulting from the global financial crisis, economic growth in the country has been swift in recent years.

Linking up with MN Pharmaceuticals would give a foreign drug company access to local distribution, low-cost manufacturing and regulatory expertise, not to mention new products. For Western companies, Turkey can also serve as a springboard to fast-growing markets in Asia.

MN, founded in 1923, makes generic drugs such as antibiotics that are injected rather than taken as pills. For MN, inking a deal with Lilly or another big Western drug company could give it access to a vast foreign distribution network.

Both Lilly and MN have lined up advisers in advance of a potential deal. Besides a foreign drug company, it is also possible MN could sell a stake to a Middle Eastern sovereign wealth fund, one of the people said.

Indianapolis-based Lilly, which makes products including the cancer drug Erbitux and Cialis for erectile dysfunction, has done a series of smaller acquisitions in recent years to augment its portfolio.

Lilly hasn't done a major deal since 2008, when it agreed to buy biotech concern Imclone Systems for $6.5 billion.

Fumbling the Future of A Once Great Industry - HP, Canon, Ricoh, Lexmark, Xerox and Kodak

This week's Businessweek article "For Kodak Change Isn't Instamatic" talks about Kodak's CEO Perez as he tries to bring digital revival into focus. The timing of such a massive turnaround is a bit off.  In Kodak's case however, better late than bankrupt.

In the past I have criticized Kodak for being too slow and too scattered to successfully pull it all together. One thing I must give Antonio Perez is his consistent leadership and sheer determination to stick to his plan despite all criticism from shareholders and Wall-Street.

Given once-in-a-life time chaos and disarray in the Document Industry, Kodak and particularly its leadership team suddenly look pretty good.

By a historic mistake, Canon just watched Ricoh snap IKON, 40% of its US business.  They did not even fight.  Just watched it happen and lost forever. Their response was even worse: buying another irrelevant box company Oce and turning all MFD distribution exclusively to HP. Canon will never be the great samurai once it was fighting passionately to win against Xerox back in the 70s.

HP has became even worse now - chaotic & suicidal with the new CEO Leo. You may want to read my blog post on HP's latest misfortunes and decide for yourself.  I hear that Leo may be selling the printing business next following PCs.

Ricoh bought IKON - a loose federation of once independent dealers. Prior to acquisition, IKON was itself painfully trying to become one integrated company. The buyout brought too much burden on a Japanese company that always managed coercively from HQs in Tokyo. Other than buying IKON, they largely missed out on the industry's services-led transition into consulting and managed print services (MPS). Recently, they fired the head of Americas. I hear a lot of talent has been leaving. Japan's old miracle of doing it "better faster cheaper" simply does not help you with services where talent and minds talk and win business. Not equipment nor factories nor kaizen....

One should not forget Lexmark, another IBM spin-off offering good technology with successful vertical solutions marketing. When the industry started consolidating at a rapid pace, Lexmark was one of the obvious printer companies to merge with. Curlander who has been the Chairman since then and his board repeatedly turned them down stating that Lexmark can continue propser and grow on its own. I will let shareholders do the math here. Now that the music has stopped, Lexmark is suddenly finding itself with no partner, limited resources, near-empty pockets in a brutally commoditized over-supplied industry desparately fighting against giant competitors. Sort of like Don Quixote fighting windmills!

And finally my old company Xerox; Under Ursula Burns, they placed two big bets and bought Global Imaging and ACS.  By doing so, they publicly announced the world the old Xerox did not in fact know how to manage or execute or build growth. Why? Global Imaging is being managed separately. Xerox Global Services has reverse-merged with ACS. Just when you think it can't get any worse, Ursula is now selling off engineering. Yes, once ran and led by engineers, the mighty Xerox is now selling off engineering! In a world where "Companies That Are Built To Last" are fighting for intellectual property, R&D, creativity and top talent, Xerox first sells off PARC. Then the entire engineering group.

I would say Kodak suddenly looks pretty good among its peers! When you have competitors like these, I would say to Antonio, just stay focused keep executing as fast as you can.