Deal disaster
When due diligence goes wrong
Good morning, syntax savants. This is your Stock Market Rundown for June 11th, 2024. Thanks for logging in. Let’s get started:
TODAY’S TOP STORY: AN ACCOUNTING SCANDAL’S FINAL CHAPTER
HP’s acquisition of Autonomy is considered one of the most catastrophically failed deals of all time. What the Three Mile Island was to nuclear energy, and the Deepwater Horizon spill was to the oil industry, the Autonomy deal was to corporate finance. But whose fault was it?
In 2011, HP paid $11 billion for knowledge management software business Autonomy. By the time a year gone by, HP had written off most of the value of the acquisition—incinerating billions of dollars.
HP’s top brass accused Autonomy of duping them by manufacturing sham sales to cook the books. A mess of lawsuits has been dragging through the courts ever since. Truly the stuff of C-level-executive nightmares.
Autonomy’s founder, Mike Lynch, was hailed as the Bill Gates of Britain when he built his firm into the UK’s biggest software company. But after the HP deal flopped, he went from celebrated entrepreneur to international fugitive. In 2023, he was extradited from the UK to face a fraud trial in San Francisco.
Lynch’s defense? HP botched the integration, then made him a scapegoat for their own sloppy mismanagement. Well, the jury must’ve found Lynch credible, because the trial just wrapped up—and he was acquitted of all charges.
Funny how often the perpetrators of these financial blow-ups walk away unscathed, like Vin Diesel coolly strolling away from an exploding Dodge Charger. But somehow, the shareholders can’t avoid getting burned.
SO WHAT ELSE IS GOING ON?
Boeing has a new line of business: interplanetary Uber. The aerospace company recently deployed its Starliner capsule to transport astronauts to the International Space Station.
A technical glitch at the New York Stock Exchange triggered wild moves in stocks like Chipotle and Berkshire Hathaway. The Big Board seems about as reliable as a Fiat in a snowstorm.
New York City just passed a law that’ll ban social media platforms from using “addictive” algorithms on minors. If it were up to me, teens on social media would be served nothing but math problems and motivational speeches.
McDonald’s lost a trademark dispute aimed at stopping a European competitor called “SuperMac” from selling burgers with “Mac” in their name. Now even more people can wolf down a MacMeal, followed by crippling MacRegret.
That’s it for today, my friends; catch you back here at the usual time tomorrow morning. Yours in capitalism, The Axe
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