HP CEO Meg Whitman told an analyst conference that Autonomy had suffered 'very disappointing licensing revenues' in HP's third quarter and that Lynch was being replaced by Bill Veghte, HP's head of software, in an attempt to improve performance.
For his part, Lynch has said that constant changes at the top of HP has caused disillusionment at Autonomy, and that several senior people have left the firm since HP acquired it last year. Lynch, who founded Autonomy back in 1996 in Cambridge, was the UK's first tech billionaire and his firm has been one of the shining lights of the entrepreneurial scene for over a decade. The $10.3bn with silicon valley veteran firm HP netted him $500m personally but disappointed some observers who saw Lynch as a possible British Bill Gates.
It seems that Autonomy has been subject to the classic takeover malady of a fundamental clash between an entrepreneurial but essentially small scale business and its giant process-heavy corporate parent. HP's Whitman apparently sees Autonomy's struggle to grow as the central issue, saying that the firm's problems are 'not the product ... It's not the market ... It's not the competition. This is classic entrepreneurial company scaling challenges it's a whole different ball game'.
As the former CEO of eBay (she joined HP last September) she ought to know what she is talking about, but of course it's the agility, short lines of communication and speed of response which makes companies like Autonomy what they are. The risk is that HP might kill the goose that lays the golden egg rather than succeed in making it lay faster.
The news came as part of a wider restructuring announcement which will see 27,000 HP staff globally lose their jobs, about 8% of its total workforce, so Lynch will not be alone in having to clear his desk. It's not clear how many of the 20,000 posts in the UK will be affected.
There have been rumblings of discontent from both HP and Autonomy since shortly after the ink was dry on the deal, with HP employees criticising Autonomy people of arrogance and unwillingness to be part of a bigger team, and Autonomy accusing HP staff of being slow and indecisive. The departure of Lynch makes it pretty clear who has won the battle, but whether HP will win the war in the longer term remains to be seen.
As for Lynch, MT wonders what he will do next. On the loose with half a billion quid in his pocket, we can¹t see him sitting on a beach for the rest of his life.