Former HP CEO called ‘dead man walking’ over Autonomy deal

Bloomberg

Hewlett-Packard Co’s board, riven with conflict, faced a “poisonous internal environment” on the eve of its announcement to acquire British software firm Autonomy.
A simmering dispute between executives burst into the open just as HP’s board wavered over whether to proceed with the $11-billion transaction, then-Chief Executive Officer Leo Apotheker said on the second day of his evidence in the civil case against Autonomy founder Mike Lynch.
HP is suing Lynch over claims he regularly inflated his company’s sales in an attempt to beat quarterly stock market expectations. The computing giant argues it was conned into overpaying for the British software firm and had to take a $8.8 billion writedown of the business just a year later.
Apotheker said he was furious with his chief financial officer, Cathie Lesjak, a veteran HP executive, who “blindsided” him with her last-minute opposition to the deal in August 2011.
Lesjak told the board that while she supported the rationale for the deal, the transaction wasn’t the best way to put HP’s cash to work, he said.
Shortly before the meeting, Lesjak sent a private email to Chairman Raymond Lane that described Apotheker as “a dead man walking.” She is scheduled to give evidence later in the nine-month trial at which HP accuses Lynch of defrauding the company. Lesjak didn’t immediately respond to a request seeking comment.
Apotheker said he would have postponed the software transaction if the board had wanted to do so. Instead, the members supported the deal, which was seen as a way to add a higher-margin business to help transform the computing giant. “I happen to be of the school that believes that dissent is fine,” he said.
After the meeting, Lane said that he told Apotheker that the board had begun to question his style.
“I said our confidence is shaken in the operational execution and in him and we want him to hear our sense but if he wants to go ahead, we support him,” Lane said in an email to the non-executive directors that signed off with “Fasten your seatbelts.”
Apotheker was fired in September 2011 before the Autonomy deal completed in November.
The CEO said he had earlier lost confidence in Lesjak’s forecasting of the business and had already decided to fire her. Lesjak stood to receive a $20 million severance package.
Apotheker, who led SAP AG before being recruited for the US role, said that HP was at a “critical point” when he joined in 2010.