It seems a lifetime ago that Hewlett-Packard acquired Autonomy PLC for $11.1bn but in fact it was 2011. The search business was different then, with Microsoft having bought FAST in 2009, followed by the Exalead/Dassault deal in 2010, Oracle/Endeca in 2011 and IBM/Vivisimo in 2012. Even at the time of purchase the customer perspective on Autonomy was far from positive, and it really was difficult to understand the HP valuation. We may learn more from the current court case in San Franciso against Sushovan Hussain, the former CFO of Autonomy. The case is U.S. v Hussain 16-cr-00462 if you want to follow it.

Now it is MicroFocus that is under the spotlight following its acquisition of a package of HPE software applications for £6.9 bn in a deal which closed in September 2017. This price was only slightly less than the original HP/Autonomy transaction, though there were other potential assets in the deal. In the intervening six years much had happened in the search business. Microsoft extended the user-facing functionality of SharePoint and played a few internal games, significant progress was made by the open source community, and companies such as Sinequa, Coveo and Exalead benefitted from the virtual absence of competition for Autonomy. There are currently around 25 vendors delivering enterprise-level search software and that leaves little room for Autonomy to return to the market.

For MicroFocus to think it could sell Autonomy into this very competitive market with a scrolling page of promises and a button to click for ‘Sales’ was totally naïve. Looking at list of partners told an equally strange story. Questions about the viability of MicroFocus started in late January following the half-year financial report, and then revised revenue and profit forecasts on Monday took the share price down by 55%. The shares opened slightly higher this morning but then a decline set in. I’m not going to be buying shares any time soon!

Martin White