From today's Sunday Times

A STRATEGIC U-turn by Hewlett-Packard soured its relationship with Autonomy, the Cambridge software company it bought last year for $10.3 billion (£6.6 billion), according to the British company’s founder.

Mike Lynch, who made a shock exit from the business last week, told The Sunday Times that HP’s decision to continue focusing on making computers was at the root of the breakdown in relations.

“We went into the deal with our eyes open. We were just unlucky that it coincided with the turmoil at the top of HP,” said Lynch.

“Once it became clear that the new chief executive’s strategy was staying more with hardware, it meant some rethinking of the original plan, and its focus on our independence became blurred.”

HP’s acquisition of Autonomy was the idea of Leo Apotheker, who became chief executive in November 2010. He wanted to ditch HP’s manufacturing operations and concentrate on software and services. The Californian company is the world’s largest PC maker.

Apotheker was ousted in September, a fortnight before the Autonomy deal finally went through. His replacement, Meg Whitman, reversed the decision to stop making hardware.

Lynch said he still rated the HP leadership. “I have a great deal of respect for Whitman, and for her senior management team. I have learnt a lot,” he said.

“HP is one of America’s great technology companies. She and the team have a big turnaround job to do, and I wish her and HP the best.”

Separately, insiders at Autonomy said matters came to a head when the company’s sales administration was switched to HP’s systems. The mismatch led to paralysis, with deals bound up in red tape, one former executive claimed.

“There were 47 straight quarters of revenue growth, and in the 48th a problem,” a source said.

HP rejected accusations of interference and bureaucracy. The claims were “baloney”, according to a source close to management. “What triggered Lynch’s departure was a very significant miss on revenue [targets] and there was no real sense that he could recover from that,” the Silicon Valley insider said.

It is thought that Autonomy’s revenues in the first three months of this year undershot forecasts by about one-third.

“You don’t miss the numbers by that range and keep your job when you work for Meg,” the source said. “You can’t have it both ways. Mike insisted on, and was given, autonomy. What we didn’t do was give him the ability to miss his targets by that margin.”

HP insisted that the way Autonomy accounts for its new contracts is solid, despite unease among some London analysts about its dizzying rates of revenue growth.